Buying and Selling Property Isn’t Always ‘Simple’: Three Recent Client Questions.

Buying and selling property is rarely as straightforward as it first appears. From retirement property charges and Stamp Duty Land Tax considerations to the tax implications of holiday lets, there can be a number of legal and financial issues to consider. In this article, Kerry Carter answers three recent questions raised by clients and highlights some important points to be aware of.

Question 1: I am thinking of buying a retirement property. Are there any differences between these and other freehold or leasehold properties?

Retirement properties often have the benefit of a manager on hand for any emergencies. There is also a social element for those persons who would like more social interaction, usually with various events and activities planned, shared social areas on site, and so on. In exchange, there is a service charge payable for the upkeep of the shared areas and the cost of maintenance. In some instances, there is a ground rent payable as well, for example, with leasehold retirement properties. You should also be aware that in many leases or transfer documents for retirement properties a ‘contingency fee’ and/or ‘transfer fee’ is payable on transfer or re-sale of the property in future. These fees are payable to the landlord and can range from 1% to upwards of 15% so do check from the outset to make sure you are aware of all charges payable during your ownership and on re-sale in future.

Question 2: We are purchasing a property with a significant amount of land, including a paddock and small woodland area. Can I apply for the mixed-use Stamp Duty Land Tax rate when I purchase?

Often when purchasing property which includes a substantial amount of land, a client will ask whether the mixed-use Stamp Duty Land Tax (SDLT) rates would apply as these rates, if applicable to the transaction, can mean that a client will pay less SDLT than under the residential rates.

The availability of the mixed-use rate of SDLT depends on whether part of the property is genuinely classed as non-residential at the date of completion. Merely purchasing a house with a large amount of land, a paddock or woodland does not automatically qualify for mixed-use SDLT treatment. HMRC will look at the nature and use of the land and whether it forms part of the property’s garden or grounds.

If you are considering claiming mixed-use treatment, we would recommend that you obtain specialist SDLT advice from a tax adviser before exchange of contracts

Question 3: I will be selling my property which is also my main residence. As part of the sale there is a converted annexe/outbuilding used for holiday accommodation, and I have been renting this out for short term holiday lets. Is there anything I should be aware of?

You may be liable to pay Capital Gains Tax (‘CGT’) on the part of the property used as a holiday let / accommodation and it is advisable to speak with a suitably qualified tax adviser at an early stage so that you are fully aware of your tax liability which must be paid within 60 days of completion.

You should check that you have the appropriate planning consent for the holiday accommodation; you should speak with your lawyer acting in the sale who will be able to examine the planning history on the Local Authority’s planning portal and advise you further. 

You may also have to arrange a separate Energy Performance Certificate for the holiday accommodation.

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If you are buying or selling a property and would like expert advice, please contact a member of our Property team info@bussmurton.co.uk or call 01892 510 222.