Lay My Hat

Hi

I have just had an offer accepted on a house I plan to operate as an FHL.

This is something I've been considering and researching since the beginning of the year. During that time, I saw a post here where someone had received a judgement from HMRC that purchases for FHL would be considered as non-residential and therefore not subject to the higher SDLT regime.

Unfortunately, I cannot now find that post (and believe me, I've searched extensively), and am being told by my solicitor that the purchase is subject to the additional 3% on SDLT. I also checked with HMRC by phone and got the same result.

Was I dreaming about the post I'd seen? Is there any way that the purchase can be presented as being for a non-residential property?

Thanks

Tony

I know nothing about this but when I want to find a post from Laymyhat I just google "laymyhat plus the subject matter".
This is what came up:
http://www.laymyhat.com/forum/viewtopic ... b71da94c95
Any use?

costa-brava wrote:I know nothing about this but when I want to find a post from Laymyhat I just google "laymyhat plus the subject matter".
This is what came up:
http://www.laymyhat.com/forum/viewtopic ... b71da94c95
Any use?

Thanks - that wasn't the post I'd seen, but your tip of using google instead of the forum search was outstanding. I'm clearly not thinking straight - I do web things as my main business and I know that you can do a query such as site:www.laymyhat.com SDLT and that restricts results just to this website

Having done that, I still can't find the magic quote, so I either dreamt I saw it, or it's been deleted.

Oh well, what's an increment of £9000 on your setup costs between friends? Sob.

This article might help explain. It appears you can only avoid the stamp duty for mixed use property. http://www.mortgagesforbusiness.co.uk/n ... surcharge/

I went full circle twice with my solicitor when recently buying mine. Originally they said I wouldn't pay the 3% as it is non residential. There is a restriction on living in the property other than as a 2nd home or holiday let. It is also an existing 'business'

I agreed. The purpose of the 3% is to unlevel the market and allow first time buyers the opportunity to buy. They clearly can't buy a property with this restriction.

However on second review, the legislation said that a holiday home would always have 3%.

This debate went back and forth until just as the SDLT form was being filled in and the 3% did not apply if I agreed that it was a trade, with a view to profit, and that it was available to let for at least 210 days a year, actually let for at least 105 days and that one occupant didn't live there for more than 31 days.

I hope this helps. And I found it very frustrating process with the solicitors who kept changing their mind.

sparkJS wrote:I went full circle twice with my solicitor when recently buying mine. Originally they said I wouldn't pay the 3% as it is non residential. There is a restriction on living in the property other than as a 2nd home or holiday let. It is also an existing 'business'

I agreed. The purpose of the 3% is to unlevel the market and allow first time buyers the opportunity to buy. They clearly can't buy a property with this restriction.

However on second review, the legislation said that a holiday home would always have 3%.

This debate went back and forth until just as the SDLT form was being filled in and the 3% did not apply if I agreed that it was a trade, with a view to profit, and that it was available to let for at least 210 days a year, actually let for at least 105 days and that one occupant didn't live there for more than 31 days.

I hope this helps. And I found it very frustrating process with the solicitors who kept changing their mind.

Many thanks for this - it helps prove I wasn't insane to have thought that this might be the case.

That said, I have spoken to HMRC on two separate occasions now, and each time they have pointed me at new guidance they have which states that if the property could be lived in, irrespective of the intended purpose when buying, then it is always classed as residential, and therefore, if you own other property as I do, then the 3% applies.

I would be very interested to know if you have any HMRC documentation at which I could point them to verify this.

This is indeed an interesting discussion. We purchased a second property last year and rushed it through to avoid this impact.

I don't think it wise to assume that any government policies are aligned. The 3% additional charge is for all second properties as far as I can see. Our property as a "holiday use only" restriction but that absolutely does not imply that it is a business and not a second home. It simply states that you cant have it as your primary residence.

I have found that several government policies contradict each other (not really a big surprise). Our "holiday use only" restriction has no clarity on what that means. I discussed this with local planning and suggested that I would follow HMRC FHL qualification criteria.

ianh100 wrote:This is indeed an interesting discussion. We purchased a second property last year and rushed it through to avoid this impact.

I don't think it wise to assume that any government policies are aligned. The 3% additional charge is for all second properties as far as I can see. Our property as a "holiday use only" restriction but that absolutely does not imply that it is a business and not a second home. It simply states that you cant have it as your primary residence.

I have found that several government policies contradict each other (not really a big surprise). Our "holiday use only" restriction has no clarity on what that means. I discussed this with local planning and suggested that I would follow HMRC FHL qualification criteria.

I have to say I agree with you. Everywhere I look and everyone I speak to says the same thing - irrespective of whether or not you intend to live in the property, if it's possible for someone to live in it, it's regarded as residential and if it's not your main home, then the 3% also applies.