News from the Residential Property Investor, the bi-monthly magazine for RLA members other artilces from the April / May 04 issue RPI news archive

Chancellor freezes stamp duty rates - April / May 2004

Rates and thresholds for stamp duty land tax remained unchanged.

For residential land and property, the rates of stamp duty land tax are 0 per cent for transactions worth £60,000 or less, 1 per cent for those between £60,000 and £250,000, 3 per cent for those between £250,000 and £500,000 and 4 per cent for those worth more.

Stamp duty on lease and rental income agreements is based on the net present value (NPV) of all the rental payments due over the term of the lease. For residential property, duty is charged at 1 per cent on the amount by which the NPV exceeds £60,000.

The same rates of stamp duty land tax apply to the premium on new leases as to the transfer of land.

Purchase of residential land and buildings in 'disadvantaged areas' will continue to benefit from an exemption from stamp duty where the consideration does not exceed £150,000.

Stamp duty land tax will now be charged on various partnership transactions involving property. So, for example, it will be charged where an interest in land is transferred into a partnership by an existing partner or by somebody who becomes a partner in exchange for an interest in land.

It will also be charged when an existing partner whose assets include an interest in land transfers all or part of his or her partnership interest to a person who is or becomes a partner, for money or money's worth.

A 'clarification' included in the Budget will cover stamp duty land tax payable on sub-sales (where a purchaser sells on without taking title) where part only of the property is sub-sold. 'Potential avoidance opportunities exploiting the interaction between the provisions on sub-sales and those on group relief and sale-and-leaseback will be closed'.

Currently SDLT is charged on uncompleted contracts which are 'substantially performed' when the purchaser either pays or takes possession. Changes will make explicit how the charge works for agreements where the contracting purchaser has a right to direct a conveyance to a third party. Such agreements are common where land is to be developed and sold, said the Revenue.

Other technical anti-avoidance provisions will clarify the treatment of 'agreements for lease' which are 'substantially performed' so that for most purposes they are treated as leases.
 

other artilces from the April / May 2004 issue

• Standard response
• Agents and lenders are in bullish mood
• Landlords advised to check small print
• Landlord and agent pay for safety lapses
• Private rented sector 'stable'
• Manchester students look at becoming landlords
• Landlords leaving London market
• Local Housing Allowance to include landlord safeguards
• Landlord training
• Council threatens evictions over own delays
• In brief
• OFT calls for greater controls on estate agents
• Chancellor freezes stamp duty rates
• Pension possibilities