Repossession of a property

[The Moose]

When a bank repossesses a property, do they pay stamp duty?

Always wondered that?!

[Du1point8]

The Moose said:

When a bank repossesses a property, do they pay stamp duty?

Always wondered that?!

I would be asking why would they, its their property until its paid for so a repossession is just taking back what is already theirs.

If they have 'paid stamp duty' in a bank version, then they would not be paying again.

Or at least should I say that the repossession system I run for a large bank, does not cater for stamp duty anywhere in the system, but I can't say more than that.

[PurpleMoonlight]

Du1point8 said:

I would be asking why would they, its their property until its paid for so a repossession is just taking back what is already theirs.

No it isn't.

The property is the security for the loan, it is not owned by the lender.

To answer the original question, no, no SDLT is liable.

[The Moose]

PurpleMoonlight said:

Du1point8 said:

I would be asking why would they, its their property until its paid for so a repossession is just taking back what is already theirs.

No it isn't.

The property is the security for the loan, it is not owned by the lender.

To answer the original question, no, no SDLT is liable.

Exactly - it's owned by the owner, not the bank!

What exemption do they use to avoid paying SDLT?

[Simpo Two]

The owner may 'own' it but I believe the mortgage company has a 'charge' on the property. In other words, they have a lien on part or all of it and it can't be sold without them getting their share.

[The Moose]

Simpo Two said:

The owner may 'own' it but I believe the mortgage company has a 'charge' on the property. In other words, they have a lien on part or all of it and it can't be sold without them getting their share.

They do indeed have a legal charge over the property, however that's different to ownership.

When they repossess a property, the ownership changes from the owner to the bank...doesn't it?

Or does that change not actually take place until the next buyer buys it - a bit like a dealer so to speak?!

[PurpleMoonlight]

I believe SDLT is due on property purchases and commercial leases, a repossession is neither so no SDLT.

[Simpo Two]

Maybe the clue is in the word 're-possess'. As in - first they owned (bought) it, then sold/lent it to the owner, and are now taking it back? Dunno.

[davegriff]

If a bank repossesses a property then they don't own it, just have control of it. No change in ownership means no SDLT charge.

[davegriff]

If a bank repossesses a property then they don't own it, just have control of it. No change in ownership means no SDLT charge.

[The Moose]

davegriff said:

If a bank repossesses a property then they don't own it, just have control of it. No change in ownership means no SDLT charge.

So the change of ownership doesn't actually happen until the bank then resells the property and SDLT is incurred then?

[davegriff]

Exactly - the mortgage which the owner signed at the start gives the bank the authority to step in and sell the property if there's a default by the owner. Most lenders appoint receivers to deal with the sale, so they don't incur direct liability, but they can sell themselves if they want.

The buyer pays SDLT in the normal way but the lender isn't liable for SDLT at any point.

[insurance_jon]

there is no stamp duty on any change of ownership when it is the subject of a court order. i.e divorce or repossession. I speak from personal experience of the former