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  • FIRST POST
    • Sestren
    • By Sestren 10th May 18, 4:07 PM
    • 9Posts
    • 3Thanks
    Sestren
    Will I be a first time buyer?
    • #1
    • 10th May 18, 4:07 PM
    Will I be a first time buyer? 10th May 18 at 4:07 PM
    I've currently got a Help to Buy ISA, and I definitely fit the criteria for being a first time buyer.

    However, shortly my business (of which I'm the sole director) will be moving premises, and I'll be signing a 7 year lease on new premises in my own name rather than that of the limited company. The lease is for an entire building, including a flat above the retail part in which I will live.

    Seven years is long enough for my interest to need to be registered in the property. Does this registration mean that the lease will count as a purchase? I initially didn't think so, but then it also strikes me that there's no real difference between signing a relatively short term lease of seven years, and purchasing a, say, 125-year lease on a flat.

    If anybody could offer some guidance then that would be great. It's not a huge issue in the scheme of things - just a minor annoyance because I'm hoping to actually buy a property at some point in the future.
Page 1
    • Rich2808
    • By Rich2808 10th May 18, 7:34 PM
    • 607 Posts
    • 457 Thanks
    Rich2808
    • #2
    • 10th May 18, 7:34 PM
    • #2
    • 10th May 18, 7:34 PM
    I've currently got a Help to Buy ISA, and I definitely fit the criteria for being a first time buyer.

    However, shortly my business (of which I'm the sole director) will be moving premises, and I'll be signing a 7 year lease on new premises in my own name rather than that of the limited company. The lease is for an entire building, including a flat above the retail part in which I will live.

    Seven years is long enough for my interest to need to be registered in the property. Does this registration mean that the lease will count as a purchase? I initially didn't think so, but then it also strikes me that there's no real difference between signing a relatively short term lease of seven years, and purchasing a, say, 125-year lease on a flat.

    If anybody could offer some guidance then that would be great. It's not a huge issue in the scheme of things - just a minor annoyance because I'm hoping to actually buy a property at some point in the future.
    Originally posted by Sestren
    The stamp duty relief guidance refers to less than 21 years for a leasehold interest - so your 7 is below that. So I expect you would be ok for the first time buyer stamp duty relief. But you might want to check with your solicitor.
    https://www.gov.uk/government/publications/stamp-duty-land-tax-relief-for-first-time-buyers-guidance-note

    'A purchase (for the purposes of FTB relief) is a purchase of a major interest if the interest acquired is a freehold or leasehold interest; for this purpose, an acquisition (whether by grant or transfer) of a lease with less than 21 years to expiry from the effective date, is not treated as a major interest.'

    The HTB isa uses the same 21 year definition.

    https://www.helptobuy.gov.uk/documents/2015/12/eligibility-of-ftbs.pdf

    I do not own, and never have owned any interest in land, whether in the United Kingdom or elsewhere, which:
    (A) is:
    (i) in England or Wales:
    (a) freehold;
    (b) leasehold, where the lease was originally granted for a term certain exceeding 21 years; or
    (c) commonhold;'

    Rules are slightly different in Scotland.
    Last edited by Rich2808; 10-05-2018 at 7:36 PM.
    • SDLT Geek
    • By SDLT Geek 10th May 18, 7:57 PM
    • 240 Posts
    • 147 Thanks
    SDLT Geek
    • #3
    • 10th May 18, 7:57 PM
    • #3
    • 10th May 18, 7:57 PM
    First time buyers!!!8217; relief is not available if the 3% surcharge applies. So consider those rules too if you are likely still to hold the lease when you buy a property.

    Under Finance Act 2003 / Sch 4ZA a lease can be a !!!8220;major interest!!!8221; if the term on the date of its grant exceeds 7 years.

    So if you want to preserve your first time buyers!!!8217; status for SDLT you will ensure that the lease is not granted for a term of more than 7 years.
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