This post was also written by Harriet Morgan.
From 6 April 2011, residential property with a consideration of over £1m will be subject to a higher SDLT rate of 5%.
This means that a purchaser whose transaction will complete on or after 6 April 2011 will find themselves paying more SDLT than if completion had taken place the day before! This increase only applies to land which consists entirely of residential property. It does not apply to non-residential or mixed used property.
What is “residential property” for the purposes of this increase?
Broadly, “residential property” is a building or part of a building which:
- is in use as a dwelling, or
- is suitable for use as a dwelling, or
- is in the process of being constructed or adapted as a dwelling,
plus any land forming part of the garden or grounds of such a building and any outbuilding on that land. This means that a sale of land on which a dwelling is being built or of a building which is being converted into a dwelling is a transaction in residential property. The sale of or grant of a lease over six or more separate dwellings as part of a single transaction is treated as a transaction in commercial and not residential property.
Do I have to pay the 5 per cent charge if I complete after 6 April but entered into a contract before then?
There is only very limited transitional relief. The SDLT increase will not apply to any transaction which is completed on or after 6 April 2011 pursuant to a contract entered into before 25 March 2010 where certain conditions are satisfied. We can provide further details if this is likely to be relevant.