Most efficient way to purchase a house to demolish & self build

user1977

oz0707 said:

SDLT_Geek said:

oz0707 said:

SDLT_Geek said:

If you are buying in England then there are some complicated stamp duty land tax issues here.  

If the price is over £500,000 a 15% flat rate could apply.  Below that you would expect the 3% surcharge to apply.

You could look up the Bewley case, about whether a building is so derelict as not to count as a dwelling for SDLT purposes.

Interesting case. Does that mean a building plot is not residential in terms of sdlt? Would it be the case if you were buying a plot with existing dwelling to be demolished and new one to be constructed that if demolition  carried out before completion then it swerves residential sdlt?

If at the "effective date" of the purchase the buyer acquires a cleared site then the buyer is not buying a "dwelling", unless there is a building in the process of construction at that date.  If the buyer is not buying a "dwelling" then the 3% surcharge cannot apply (nor the 15% flat rate in the context of a company buying for over £500,000).

If the land acquired does not form part of the garden or grounds of another dwelling then the acquisition is of "non-residential" property, so the non-residential rates of SDLT apply (with a top rate of 5%).
  
There can be a trap with the "effective date" point.  This is usually the date of completion of the purchase.  But if the buyer carries out the demolition of a dwelling on the property then the buyer "taking possession" is likely to trigger an earlier effective date.  On that date the property is a dwelling, so the residential rates apply, possibly with the 3% surcharge or even the 15% flat rate applying (for companies buying for over £500,000).

Is the trick then generally to negotiate and agree for the vendor to have dwelling demolished between exchange and completion If buying a property being marketed as existing detached with permission to demo and build new. 

You can ask, but I doubt many vendors would want to get involved with demolition if they haven't already done it.

oz0707

I reckon there'd be more than you think in a normal market. If somebody was marketing a property that they'd had the initiative to get pp for demo and rebuild they know it's going to be demod anyway. If you were to make it a condition of your offer and do all the legwork contacting firms and getting quotes. 

WRussell

Many thanks all for your advice on my quite spurious question, specifically the comments around sdlt. Although the intention is to build a 4 bed detached house under the 500k mark, I am starting to understand the potential complexities of setting up an initial lending vehicle with ax view to demolish. I have completed 3 heavy renovation programs however having done something further reading on the back of your comments, I think the only option would be a self build mortgage or some form of bridging loan.