SDLT - Higher rate, conflicting advice

SDLTpains

Hi Everyone, hoping someone can weigh in here on this scenario: 
In 2014 - 2017 we bought and lived in a flat in London 
In 2017 we moved out of London to start a family, we kept the flat in London and let it out
We have been renting out of London since then, and now are purchasing our family home here - our whole life is here
We are not selling the London flat. 

Initially, our solicitor said that we would not be liable for the higher rate SDTL on second homes, as we are replacing our main residence - now, days before completion they have changed their mind and are saying that we are liable for the higher rate  - its a difference of around 15k in SDLT charges which is an absolute killer as we had proceeded on the basis that SDLT was only going to be 2,400 - now we are facing moving into a property that needs gutting and not having the money to do it!

So does anyone have any thoughts on our status of this new purchase "replacing our main residence" and our liability to pay the higher SDLT rate?

uknick

If I understand this correctly, you're buying a new home to live in whilst still owning a property.  I'm struggling to see why your solicitor ever thought you'd not have to pay the additional 3% as you are in effect buying a 2nd house.  Unless, at some time it was implied your original flat was going to be sold prior to completion on the new property.

One small glimmer of light on your horizon, if you sell the flat within 3 years you may be able to reclaim the additional stamp duty.

https://www.gov.uk/government/publications/stamp-duty-land-tax-apply-for-a-repayment-of-the-higher-rates-for-additional-properties 

unkle

I'd also not be happy with your solicitor, but sadly they are now correct, the 3% is payable. Why your solicitor gave you that advice initially that it wasn't payable only they can say, I'd certainly be asking them.

Also at @uknicks point, you wouldn't be able to reclaim the 3% if you sold the other property, this is because you haven't lived there, as your main residence, in the past 3 years. Had you of lived in the previous residence (as your main residence) at some point in the last 3 years you could potentially reclaim it.

It's one for he 2 three year tests (living in as well as selling within 3 years)

uknick

unkle said:

I'd also not be happy with your solicitor, but sadly they are now correct, the 3% is payable. Why your solicitor gave you that advice initially that it wasn't payable only they can say, I'd certainly be asking them.

Also at @uknicks point, you wouldn't be able to reclaim the 3% if you sold the other property, this is because you haven't lived there, as your main residence, in the past 3 years. Had you of lived in the previous residence (as your main residence) at some point in the last 3 years you could potentially reclaim it.

It's one for he 2 three year tests (living in as well as selling within 3 years)

Doh!! I missed that point, but a claim for refund is probably academic as they make no mention of wishing to sell the rental property.

unkle

I don't know what the solicitor was thinking with the original advice, however if they went into writing I'd be talking to them about how they intend to rectify their mistake.