Title absolute and ending of lease
Discussion
I m hoping someone can help me understand this a bit better and possible save us a bit of cash in the process.
A family member is looking at buying a property after a number of years in a leased property.
This lease is a title absolute and they are listed as proprietor on the leasehold title due to it being a longer than 7 years lease.
The problem is that we re being advised they are now going to have to pay the increased stamp duty due to having 2 properties.
Which I don t understand as they don t own the property they live in. I do understand that hmrc will see it this way but on surrendering the lease thus would change?
For clarification- the property they currently live in is leased.
The lease has a break clause.
We re in the process of sorting out a surrender of the lease.
How can we navigate this so that they can purchase the house and not be subject to this increased stamp duty?
They can t move out of the leased property until completion of the new property.
A family member is looking at buying a property after a number of years in a leased property.
This lease is a title absolute and they are listed as proprietor on the leasehold title due to it being a longer than 7 years lease.
The problem is that we re being advised they are now going to have to pay the increased stamp duty due to having 2 properties.
Which I don t understand as they don t own the property they live in. I do understand that hmrc will see it this way but on surrendering the lease thus would change?
For clarification- the property they currently live in is leased.
The lease has a break clause.
We re in the process of sorting out a surrender of the lease.
How can we navigate this so that they can purchase the house and not be subject to this increased stamp duty?
They can t move out of the leased property until completion of the new property.
Edited by Bergs on Tuesday 28th October 19:02
If they don't lose the leasehold place the same day as buying the freehold place, they have to pay the extra stamp duty, but if they sell/lose the leasehold place within a certain time, they may get a refund of the extra SDLT?
It happens to people who take a bridging loan so have two houses for a short period
DYOR, the HMRC website is a good starting point.
It happens to people who take a bridging loan so have two houses for a short period
DYOR, the HMRC website is a good starting point.
I ve spent the last 2 days researching and in my mind it should be a case of:
Agreement of surrender
Negotiations on dates (in line with completion)
Completion date comes and the major interest in the lease property ends
Title deed changed.
The solicitor doesn t seem to think this is the case. I’m waiting to speak to them today to ask why as my family member can’t articulate to me what the solicitor told them.
I don t believe refund of stamp applies to leases as far as I can tell.
Agreement of surrender
Negotiations on dates (in line with completion)
Completion date comes and the major interest in the lease property ends
Title deed changed.
The solicitor doesn t seem to think this is the case. I’m waiting to speak to them today to ask why as my family member can’t articulate to me what the solicitor told them.
I don t believe refund of stamp applies to leases as far as I can tell.
Edited by Bergs on Wednesday 29th October 08:17
Your family member owns the flat and if they are going to essentially own two properties on completion then the higher rate is payable. If the sale of the flat and the purchase of the new property are being completed on the same day then the higher rate of stamp duty should not apply.
It is correct that if the flat sells at a later date (subject to time constraints) then some element of refund could be given.
Your solicitor will know what he is talking about but it is for you/your family member to get specialist tax advice should you need it.
It is correct that if the flat sells at a later date (subject to time constraints) then some element of refund could be given.
Your solicitor will know what he is talking about but it is for you/your family member to get specialist tax advice should you need it.
Bergs said:
For info.
This is a property that is owned by a company. It was leased to my family member for 10 years.
He won t be selling the property as he is a tenant paying rent.
If he's keeping the property on a long lease, then his new property will be a second property.This is a property that is owned by a company. It was leased to my family member for 10 years.
He won t be selling the property as he is a tenant paying rent.
There may be some grey areas with short leases being more like renting or business premises being different, you need to DYOR.
The HMRC website is a good starting point.
In the past, I've found contacting HMRC to be worthwhile, but that was a long time ago!
Bergs said:
For info.
This is a property that is owned by a company. It was leased to my family member for 10 years.
He won t be selling the property as he is a tenant paying rent.
How much rent? £100 a year or a proper rent? How long is left on the lease?This is a property that is owned by a company. It was leased to my family member for 10 years.
He won t be selling the property as he is a tenant paying rent.
Government guidance is here, but basically if the remainder of the existing lease is worth less than £40,000 it doesn't trigger the higher rate SDLT on the purchase property: https://www.gov.uk/guidance/stamp-duty-land-tax-bu...
If in doubt get it valued professionally.
Will the current leased/rented property agreement be terminated when they move into the new property?
IIRC you can reclaim the extra stamp duty if you dispose of the previous property within 18 months of acquiring the new property and the new property becomes your main residence. I did this about 4 years ago, owned both properties for 6 months allowing for a full renovation on the new house, then sold the old house and reclaimed the extra 3% stamp duty.
IIRC you can reclaim the extra stamp duty if you dispose of the previous property within 18 months of acquiring the new property and the new property becomes your main residence. I did this about 4 years ago, owned both properties for 6 months allowing for a full renovation on the new house, then sold the old house and reclaimed the extra 3% stamp duty.
It’s a bit awkward to explain.
They leased the property from a company on a 10 year lease which I’m told lists them as proprietor on the lease documents and title absolute on the title deeds.
They pay a small amount of yearly rental.
They are planning to move out into a property that they will be purchasing and surrendering the lease property on completion
They leased the property from a company on a 10 year lease which I’m told lists them as proprietor on the lease documents and title absolute on the title deeds.
They pay a small amount of yearly rental.
They are planning to move out into a property that they will be purchasing and surrendering the lease property on completion
Bergs said:
It s a bit awkward to explain.
They leased the property from a company on a 10 year lease which I m told lists them as proprietor on the lease documents and title absolute on the title deeds.
They pay a small amount of yearly rental.
They are planning to move out into a property that they will be purchasing and surrendering the lease property on completion
See my post above.They leased the property from a company on a 10 year lease which I m told lists them as proprietor on the lease documents and title absolute on the title deeds.
They pay a small amount of yearly rental.
They are planning to move out into a property that they will be purchasing and surrendering the lease property on completion
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