Further to our previous blog posts on Stamp Duty Land Tax (“SDLT”), it is worth bearing in mind that SDLT falls due on the date that the purchase contract is substantially performed. Deemed substantial performance of the contract will differ in each transaction and will turn on the facts. Persuasive factors include whether any part of the purchase price (generally 90% of more) or any rent has been paid or if the buyer has gone in to possession.
Developers often pay part of the purchase price then take possession of a property in order to begin construction of the development so they need to consider at what point the SDLT liability arises. If a developer exchanges a contract for purchase and then possesses even part of the land with a view to selling it on the contract will likely be deemed to have been substantially performed and SDLT must be paid at that point. All the facts must be taken into consideration: exclusive possession and occupation is key, simply entering onto the land to take measurements or undertake surveys for a limited time may not constitute substantial performance. Should a developer’s right of access be limited to designated hours, that limitation on occupation means that the contract is unlikely to be considered substantially performed.
For further information regarding Stamp Duty Land Tax or property matters, please contact Nicky Cleightonhills on 0207 7035034 or ncleightonhills@meaby.co.uk.
Meaby’s areas of specialisms include: – the acquisition and disposal of high-value commercial and residential property, general conveyancing, leasehold enfranchisement (acting for both landlord and tenant in statutory lease extensions, collective enfranchisement and freehold purchases under the Leasehold Reform Act 1967 and Leasehold Reform and Urban Housing Act 1993), acting for both landlords and tenants in the grant of commercial leases including leisure (A3 and A4 planning) use, industrial estates (B1 and B8) use, and (A1) retail use, all manner of Landlord and tenant matters including business lease renewals, section 25 notices and section 26 requests under the Landlord and Tenant Act 1954, interim rent and dilapidation claims, rent arrears recovery, service charge disputes, break notice issues; and applications to assign/underlet, option, overage and pre-emption agreements, structured property investments often with a leasehold element, right to manage, service charge disputes, residential development under permitted development rights and all property matters arising from estate planning. We cover all areas in England and Wales. Our Central London Office is based in Mayfair. We also have an office in Buckhurst Hill which covers the outer areas of East London, Essex and Hertfordshire including Chigwell, Buckhurst Hill, Loughton and Woodford).
