Stamp Duty options for Shared Ownership resale. Market Value Election?

StephLON

Hi there SDLT_Geek, 

Can you please confirm if a Market Value Election is an option for me?

I am a first-time buyer in the process of purchasing a Shared Ownership resale. My mortgage advisor suggested it would be a good option. When asking my solicitor however, he said he could not help me as he is not an SDLT specialist. Upon asking for a recommendation for a specialist, he just says he no, he cannot help. It is quite frustrating, so I am hoping you can clarify for me!

Looking through this forum there is mention of the MVE, however further digging online it appears that this option might only apply to new leases, ie, new build properties. Is that the case? The government website isn't totally clear. If MVE is not an option I believe I will pay nothing. But if MVE is an option, I figure it would be worth it on the chance that I might buy the property outright at some point in the future (pay a small amount now to avoid a larger amount later).  

Here is further info if that assists:

-Country: England

-Type: Flat (Leasehold) 

-Full value: 440,000. 

-Purchasing: 40% = 176,000

-I am a first time buyer (so the additional exemption makes this option appealing)

-This will be my primary/only residence

-First buyer was in 1985. Second buyer was in February 2003 (She says she did not pay stamp duty at the time as the purchase price was under the threshold). I'd be the third buyer of this property.

Thank you!

SDLT_Geek

StephLON said:

Hi there SDLT_Geek, 

Can you please confirm if a Market Value Election is an option for me?

I am a first-time buyer in the process of purchasing a Shared Ownership resale. My mortgage advisor suggested it would be a good option. When asking my solicitor however, he said he could not help me as he is not an SDLT specialist. Upon asking for a recommendation for a specialist, he just says he no, he cannot help. It is quite frustrating, so I am hoping you can clarify for me!

Looking through this forum there is mention of the MVE, however further digging online it appears that this option might only apply to new leases, ie, new build properties. Is that the case? The government website isn't totally clear. If MVE is not an option I believe I will pay nothing. But if MVE is an option, I figure it would be worth it on the chance that I might buy the property outright at some point in the future (pay a small amount now to avoid a larger amount later).  

Here is further info if that assists:

-Country: England

-Type: Flat (Leasehold) 

-Full value: 440,000. 

-Purchasing: 40% = 176,000

-I am a first time buyer (so the additional exemption makes this option appealing)

-This will be my primary/only residence

-First buyer was in 1985. Second buyer was in February 2003 (She says she did not pay stamp duty at the time as the purchase price was under the threshold). I'd be the third buyer of this property.

Thank you!

The market value election is not available where the purchase is by means of taking an assignment of an existing lease.

It might be that you will not have much SDLT to pay anyway if you eventually staircase out.  Using today's figures, you might pay £264,000 to staircase out.  That transaction would not be "linked" to your original purchase.  On today's rates of SDLT, the tax on £264,000 would only be £700.

StephLON

Thank you for confirming. I will plan to forgo any SDLT payments now and deal with it if/when I can buy the remaining amount in the future.

Thank you again. This is much appreciated!

StephLON

Good morning, SDLT_Geek. 

Following on from the above, the lease details were lacking pertinent points like a rent review details, et al. There was talk of amending the current lease but it turns out they drafted a new one. Will this still fall under the "existing lease" clause? I am trying to establish if I now an opportunity to take advantage of the FMV option.

My solicitor's wording for reference: 
"I have had an initial review of the Deed and it looks like the Landlord will be granting a new lease under the same terms of the existing lease to a modern standard, as opposed to varying the existing clauses in the current lease."

Thank you!

SDLT_Geek

StephLON said:

Good morning, SDLT_Geek. 

Following on from the above, the lease details were lacking pertinent points like a rent review details, et al. There was talk of amending the current lease but it turns out they drafted a new one. Will this still fall under the "existing lease" clause? I am trying to establish if I now an opportunity to take advantage of the FMV option.

My solicitor's wording for reference: 
"I have had an initial review of the Deed and it looks like the Landlord will be granting a new lease under the same terms of the existing lease to a modern standard, as opposed to varying the existing clauses in the current lease."

Thank you!

I can think of a number of ways in which the replacment lease could be put into effect.  Here are some options:

(a)  The surrender and regrant is arranged with the existing lessee and the lease is then assigned to you.

(b)  The existing lease is assigned to you and you then arrange the surrender and regrant.

(b)  The existing lessee surrenders the lease to the social landlord and the social landlord grants you a new lease.

Can you find out which method is being used?

You are still paying £176,000 for a 40% share?

StephLON

Hi, 

Thanks for the quick reply. 

I think it is option A. The new lease has the seller's name and the housing association on it. As I write this I think the answer is obvious, as I will be taking over the lease from her, so technically it exists, correct?

Yes, still buying 40% of 440,000 at 176,000. 

Thanks again.

SDLT_Geek

StephLON said:

Hi, 

Thanks for the quick reply. 

I think it is option A. The new lease has the seller's name and the housing association on it. As I write this I think the answer is obvious, as I will be taking over the lease from her, so technically it exists, correct?

Yes, still buying 40% of 440,000 at 176,000. 

Thanks again.

Yes, I think you have worked this out for yourself correctly; you will be taking the assignment of a lease, so there is no opportunity for you to make a market value election under the shared ownership SDLT rules.

StephLON

Thank you for clarifying!