Is a holiday home with holiday use restriction classed as non-residential/exempt from Stamp Duty

LadyCarolJ

I'm interested in buying a small holiday home, a chalet type building, and there is a holiday use restriction on property.
I already own my own home.

In calculating if Stamp Duty is payable on the holiday home and at what rate I'm unsure I should class it as non-residential or residential as the lease states ‘not to use the Property as the primary, principal, permanent or unrestricted place of residence or accommodation of the Tenant…’. .

The online calculator shows that if its classed as residential then stamp duty is payable and if its classed as non-residential then no stamp duty is payable.

The estate agent details state...The properties on this development do have a holiday use restriction (i.e. they cant be used as a permanent residence)

If I am prevented living in it by planning regulations restricting to holiday use and the lease preventing it being a my permanent residence, is it non-residential for the purposes of stamp duty?

SDLT_Geek

LadyCarolJ said:

I'm interested in buying a small holiday home, a chalet type building, and there is a holiday use restriction on property.
I already own my own home.

In calculating if Stamp Duty is payable on the holiday home and at what rate I'm unsure I should class it as non-residential or residential as the lease states ‘not to use the Property as the primary, principal, permanent or unrestricted place of residence or accommodation of the Tenant…’. .

The online calculator shows that if its classed as residential then stamp duty is payable and if its classed as non-residential then no stamp duty is payable.

The estate agent details state...The properties on this development do have a holiday use restriction (i.e. they cant be used as a permanent residence)

If I am prevented living in it by planning regulations restricting to holiday use and the lease preventing it being a my permanent residence, is it non-residential for the purposes of stamp duty?

Is the property you are buying in England, so the relevant tax is stamp duty land tax?  I will assume that for now.

The conveyancer acting for you on the purchase should be able to advise you on SDLT, the answer will depend on the detail.  The clause you quote from the lease does not prevent the property being used as someone's second home (only as someone's main home).  That suggests that the property is suitable for use as a dwelling, so the residential rates would apply.  Because you have an existing home, I would expect the 3% surcharge for additional properties to apply.

As you say though, the planning conditions will be relevant, they might be different from the lease and might prohibit use of the property as a dwelling.

LadyCarolJ

Hi, Thankyou
Yes its in England.
It may also be relevant that there is no council tax to pay - the service charges include an apportion of the business rates for the site -  its on a site with about another 140 holiday properties.
It is leashold with 109 yrs remaining of 125 yr lease. There is ground rent as well as service charges
The lease appears to be silent on length of stay at any one time

I take your point on the second home/main home - I'll check with the local authority

SDLT_Geek

One thought, you are definitely buying a "building"?  The SDLT position is different where one buys a leasehold site on which one puts a caravan / mobile home / unit which could be lifted away again.