Confusing advice from solicitors about extra 3% stamp duty

[Harryman]

Hi all, nice forum.

My story.

I owned 2 homes. One is a rental house I owned outright (no mortgage) and one my main residence (no mortgage). Owned both for 3 years. Had to move away Jan 2016 due to work so I put my main home up for sale in November 2015 and now live in rented accommodation at other end of the country. I left my main residence empty and it sold Nov 2016. (took a whole year to sell) So, I`m left with one property I own outright which is rented out. I`m still living in rented flat.

I`ve found a house I want to purchase, a new build. Now is the problem. The solicitors for the new build are saying I have to pay the higher tax rate because I own another home. The solicitor I normally use says I pay the regular tax rate as I`m replacing my main residence.

If I have to pay the higher amount, I can`t afford the house, it adds another 12,000 pound to the price which is a lot of money.

I went on to HMRC stamp duty calculator site and typed in my details. It came back saying I only pay the basic rate as I`m replacing my main residence, yet this builders solicitor are insisting I pay the higher.

HMRC site questionnaire

1 Freehold/leasehold answer - freehold

2 property type answer - residential

3 effective date of transaction answer - March 2017

4 are you an individual answer - yes

5 Additional residential property answer - yes

6 Replacing main residence answer - yes

7 purchase price answer - 420,000

Result - purchase price of 420,000 total sdlt due 11,000


Am I missing something here or do the solicitors for the builder not know what they`re talking about?

[maths]

The new 3% SDLT provisions have been on the statute books for nearly one year now yet many solicitors seem to fail to understand these provisions despite historically Stamp Duty and now SDLT being areas of expertise the law profession claims to possess.

The number of dwellings owned by an individual is irrelevant if the purchase of the new dwelling is a replacement for the purchaser's only or main residence [Finance Act 2003 Sch 4ZA paras 3(5) and 6] ie the new purchase is at the time of purchase intended to be the individual's only or main residence.

This would seem to fit your facts.

The seller's solicitor view of the transaction is irrelevant as it's your solicitor's view that is important. Problems do and have arisen where the buyer's solicitor argues the 3% is payable when in fact it is not.

[Harryman]

Thanks Maths, that puts my mind at ease.

The builders were wanting me to use their solicitor and when I mentioned my second property they started saying I need to pay the higher amount. So I contacted the solicitor who sold my house and they quoted me the regular stamp duty after I explained the situation.

Now the builders mortgage/sales people want my solicitor to talk to their solicitor.

They even said to use their solicitor as they already know the 150-page terms, whereas my solicitor will have to read through and may not be able to complete within the 28 days they give you.

Hopefully, they can sort this out.

Thanks again.

Harry.

Ps I`ll report back once everything is finalised or if the deal falls through.

[Harryman]

The builders etc called today saying after they explained my situation to their solicitors it was agreed I only pay the regular rate of stamp duty.

I don`t think they wanted to admit their solicitors were wrong, so used my circumstances as an excuse. They knew I was replacing my main residence.

If unsure, research and get another opinion.

Thanks Maths for your advice.

[maths]

Appreciate you letting us know the outcome.

Pleased you sorted them out!!