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Shared Ownership SDLT - contradicting answers

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I am moving into a new build shared ownership property in London, practical completion should be in September. The problem is I keep being given contradictory answers and its having an impact on my ability to set budgets / funds aside! 

Key facts:
  • Open Market Value: £530,000
  • Share being purchased: 10% (£53,000)
  • Rent: 2.75% on unowned share (£13,118 in yr1)
  • Lease Length: I assume 990 yrs as its under the new GLA grant regime
  • I am a first time buyer (although my understanding is this doesn't apply as the OMV of the property is over £500k?)
My solicitor has told me that I can expect to pay £11,500 in SDLT if I make a market value election or £0 if I opt to pay in stages. 

Is this really correct? When using online calculators I get the following estimates:
  • Open Market Election: £16,500 (Savills calculator)
  • Stage Payments: c.£2700-£2000 (HMRC calculator for new leases - varies depending on assumed indexation). 
I will be opting to pay in stages so this is what I am most interested in, but can anybody offer any assistance in explaining the discrepancies!? 

Comments

  • gwynlas
    gwynlas Posts: 2,264 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Unless you are absolutely desperate to get into secured  rental accommodation I would not be purchasing shared ownership at all unless you believe that the open market value is correct.

    There can also be issues than down value the property such as being on a mixed use ie social rent, market rent and SO development

    Look at comparables within a reasonable radius.

    A 10% share will get you through the door but if you wish to staircase in the future you will always have to agree the price offerred by the HA which again might be higher than the open market.
    Rent service charges etc  will have annual increases built in
  • I am moving into a new build shared ownership property in London, practical completion should be in September. The problem is I keep being given contradictory answers and its having an impact on my ability to set budgets / funds aside! 

    Key facts:
    • Open Market Value: £530,000
    • Share being purchased: 10% (£53,000)
    • Rent: 2.75% on unowned share (£13,118 in yr1)
    • Lease Length: I assume 990 yrs as its under the new GLA grant regime
    • I am a first time buyer (although my understanding is this doesn't apply as the OMV of the property is over £500k?)
    My solicitor has told me that I can expect to pay £11,500 in SDLT if I make a market value election or £0 if I opt to pay in stages. 

    Is this really correct? When using online calculators I get the following estimates:
    • Open Market Election: £16,500 (Savills calculator)
    • Stage Payments: c.£2700-£2000 (HMRC calculator for new leases - varies depending on assumed indexation). 
    I will be opting to pay in stages so this is what I am most interested in, but can anybody offer any assistance in explaining the discrepancies!? 
    Open market election

    I agree with you, that if an open market election is made you would pay SDLT of £16,500 on the value of £530,000.  The rent is ignored when an election is made.  First time buyers relief does not apply now for purchases for over £500,000.

    Paying in stages

    In the absence of a market value election, SDLT is due at the time of the grant of the lease on:
    (a)  The sum paid (£53,000) which assuming this is your only property is £0
    (b)  On the net present value of the rents.  Assuming £13,118 per year rent for a 990 year lease, that gives SDLT of £2,497.

    Note that if the rent is only increased in line with the RPI (as usual for shared ownership leases) then the assessment of the net present value excludes rent increases and one uses the initial annual rent.

    Further SDLT would be due if you staircased to over 80% on the "paying in stages" option.
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