Stamp Duty Shared Ownership Query

TheSeaSays

Hi there,

I have tried without success to find an answer to my question, even calling the Government stamp duty helpline who just send links, which I still cannot work out.

In September 2000, we were one of a small number of people who were accepted onto a shared ownership programme by a housing association, where we could purchase any property (within a price band) on the open market.  We found a house for £134,950.00 and purchased 50%, paying rent on the remaining 50%.

At the time we only paid stamp duty on the 50% we purchased and I have the letter that states what we paid at the times as the following:

"Stamp duty of £960 is based at the rate of 12% on the specified annual rent of £2361.63 plus 1% on the premium of £67,475.00 (rounded up to nearest £5)".


The property is now worth approx.  £420K and I am confused by the Gov. advice that says you don't pay any stamp duty until you buy more than 80%.

Does anyone know exactly how much we would need to pay, or indeed the calculation?

Many many thanks for any advice.

SDLT_Geek

TheSeaSays said:

Hi there,

I have tried without success to find an answer to my question, even calling the Government stamp duty helpline who just send links, which I still cannot work out.

In September 2000, we were one of a small number of people who were accepted onto a shared ownership programme by a housing association, where we could purchase any property (within a price band) on the open market.  We found a house for £134,950.00 and purchased 50%, paying rent on the remaining 50%.

At the time we only paid stamp duty on the 50% we purchased and I have the letter that states what we paid at the times as the following:

"Stamp duty of £960 is based at the rate of 12% on the specified annual rent of £2361.63 plus 1% on the premium of £67,475.00 (rounded up to nearest £5)".


The property is now worth approx.  £420K and I am confused by the Gov. advice that says you don't pay any stamp duty until you buy more than 80%.

Does anyone know exactly how much we would need to pay, or indeed the calculation?

Many many thanks for any advice.

You will need to give more information if any useful help is now to be given.

Most importantly what are you now doing?  Staircasing to 60%?  Or to 80%?  Or to 100% ?  How much are you paying?

Or are you doing something else?

Is the property in England?

TheSeaSays

Thank you for responding.

We want to staircase to 100% so we own it outright.
Yes we are in England.
Had it surveyed and valued at £420K, so we would pay £210K to buy it outright.

SDLT_Geek

TheSeaSays said:

Thank you for responding.

We want to staircase to 100% so we own it outright.
Yes we are in England.
Had it surveyed and valued at £420K, so we would pay £210K to buy it outright.

The rules are quite complicated, but assuming the ownership of the freehold has not changed since 2000, so you are dealing with the same landlord entity, then I make the SDLT £1,039.  That also assumes you have no other property interests.  The calculations are below.

On the basis that the £67,475 and the £210,000 transactions are linked transactions, we first work out notional SDLT on the total of £277,475.  At today's rates of SDLT that comes to £1,373.

But the SDLT on staircasing is a fraction of that £1,373.  The fraction is £210,000 / £277,475.  That gives SDLT of £1,039.

EssexHebridean

I hate doing shared ownership staircasing SDLT submissions - this has reminded me why! I’m glad that SDLT_Geek did the maths, and I agree with the logic in both the calculation method and the final figure. 

OP you are also correct that if you staircase to 80% you would not pay any further SDLT at that time - in fact IIRC a submission does even need making at that point, it is only once you go over the 80% share that anything further is required for HMRC.

TheSeaSays

The housing association was bought out about 10 years ago by another housing association, but everything stayed the same and freehold is still held by them.  They have confirmed on staircasing to 100%, we will own it outright.   No other propert

I understand the calculation of stamp duty at £1373.00, but can you explain again how you get the figure of £1039.00 (I can't see how you get that figure).

Maths is not my strong point, so I really appreciate the time you have taken.

Many thanks.

SDLT_Geek

TheSeaSays said:

The housing association was bought out about 10 years ago by another housing association, but everything stayed the same and freehold is still held by them.  They have confirmed on staircasing to 100%, we will own it outright.   No other propert

I understand the calculation of stamp duty at £1373.00, but can you explain again how you get the figure of £1039.00 (I can't see how you get that figure).

Maths is not my strong point, so I really appreciate the time you have taken.

Many thanks.

I got the figure of £1,039 by taking a fraction of £1,373.  The fraction relates to the proportion of the payment made for staircasing now to the total relevant payments made for the property.

TheSeaSays

Thank you very much @SDLT_Geek and @EssexHebridean, I really appreciate your help.

EssexHebridean

There is a useful guide on the HMRC site here: https://www.gov.uk/guidance/sdlt-shared-ownership-property It’s potentially a little tricky to grasp, and the actual calculations usually require a pen and paper in my case at least, but it does explain the method used for the calculation.