Additional 3% SDLT applies to “additional residential dwelling” purchased after 1st April 2016
This has caused concern and confusion and as a result some aspects of the rules have been further clarified as well as amendments to the Finance Bill having been made.
Three Areas that we think you should be aware of:
If an annexe or ancillary dwelling, within the grounds of a main dwelling being purchased, is capable of independent occupation but is “subsidiary to the main dwelling” then it will not qualify for the higher rate of SDLT. For this to work, the part of the price attributable to the main dwelling must be at least two thirds of the total price for all dwellings within the building or grounds. There is no limit to the number of properties that can be subsidiary.
If you are replacing your main residence, after you have sold it, then there is no surcharge even if additional properties are owned. However if the replacement is purchased before the main residence is sold the 3% surcharge will be payable. However a refund can be claimed if the original main residence is sold within 36 months of the purchase of the new one.
There was concern that the 3% surcharge would be triggered where a parent (who owns other property), needed to be named on a mortgage when helping a child buy a house. The surcharge is avoided so long as the parents are bare trustees so they do not acquire a beneficial interest in the child’s new home. Parents can also lend money to a child and take out second mortgage to cover this, as long as they do not receive a beneficial interest in the child’s home.
These are intended as useful prompts for our clients and buyers. We are not SDLT advisors and therefore you must consult your solicitor to seek clarification or advice.