My husband and I considered moving outside London for a couple of years when we finally found the perfect country house in 2021. We wanted to snap it up and were in the fortunate position of not having to sell to fund the purchase. However, we incurred a sizeable stamp duty bill for purchasing a second home. Can we reclaim the additional rate if we sell our London flat within three years of completion? If so, can you suggest any steps we can take to speed up the sale of the London flat?
Adam Fletcher, associate at law firm Farrer & Co, says if you own or have an interest in residential property anywhere in the world, the purchase of an additional residential property will trigger a stamp duty land tax (SDLT) surcharge of 3 per cent in England and Northern Ireland. (Higher rates apply in Scotland and Wales.) This surcharge applies regardless of whether the additional property is lived in or rented out.
You should be able to reclaim the additional SDLT paid when you sell your London flat, provided that this is a sale of your previous main residence. As you rightly point out, you only have three years to complete the sale of your previous main residence to claim the refund, so you will need to move quickly.
First, appoint your professional team at an early stage. When selecting your legal advisers, it is crucial to ensure that they have capacity to execute the transaction promptly and the technical expertise to deal with your particular property. Appointing solicitors before you have a purchaser puts you in the best position to progress with a sale as quickly as possible.
Ask your legal team to prepare a sales pack of required legal documents (including title documents and property searches) in advance of any offer. Some local authorities can take weeks to provide search results and you may need to obtain indemnity insurance to cover any outstanding information, so the sooner you get started with this the better.
You can assist in this process by gathering copies of key documents, such as any guarantees or building completions certificates, and providing these to your solicitors at the outset. This will enable you to respond to a buyer’s inquiries efficiently and save time during the selling process.
To help find a buyer quickly, ensure your property is priced appropriately. Try to obtain several valuations before marketing the property to ensure the price is accurate and realistic for the market. If it hasn’t been redecorated over the past couple of years, it is worth sprucing it up to ensure its presentation is in keeping with the asking price. Small aesthetic changes can play a big role in attracting buyers.
Finding a dynamic estate agent can also add a huge advantage. A good agent will establish whether a potential buyer is serious, help drive a transaction forward and liaise effectively with other professionals. Get recommendations from friends, family or your solicitors to ensure you pick the right agent.
Once you have completed the sale of your London property, remember you must claim the SDLT refund within 12 months of completion of the sale — you will need the unique transaction reference number from the SDLT form you submitted on the purchase of your country property in order to do so.
Why has my conveyancer refused to act on my flat purchase?
I have had my offer accepted on a London flat in a high-rise building and I feel like I am getting a good deal. However, my conveyancer will not act for me on this purchase. Apparently, my mortgage provider’s requirements are too complicated when it comes to blocks of more than 11 metres or five storeys high, due to the Building Safety Act 2022 rules on cladding costs. What is so complicated about an eight-storey flat?
Martin Whitehorn, solicitor at Julie West solicitors, says that after the 2017 fire at Grenfell Tower in London the government introduced the Building Safety Act 2022, so qualifying leaseholders in England could no longer be charged to remove unsafe cladding from high rises. While this has prompted some mortgage lenders to start lending on high-rise flats again, it has come with additional checks for lawyers, which has put some people off carrying out this work. However, not all conveyancers reject this additional work.
On the purchase of a flat such as yours, a conveyancer would need to review certain key documents such as the landlord certificate and leaseholder certificate. The landlord certificate informs leaseholders whether they benefit from the protections in the Act. The leaseholder certificate provides sellers with proof that they qualify for the new protections, as not all leaseholders in high rises qualify.
To qualify, a leaseholder must either be able to prove that their high-rise flat was their main home on February 14 2022, or that they owned no more than three UK dwellings including their high-rise flat on February 14 2022, or, finally, that they bought the flat from a person who satisfied one of the previous two criteria.
Broadly speaking, landlords have to pay for all of a high rise’s fire safety defects if they built (or are linked to the builder of) a defective high rise, or the net worth of the “landlord group” of companies exceeds £2mn per building.
In some cases, landlords can pass on non-cladding fire safety defect costs to leaseholders in the service charge, but only up to a capped amount based on the property’s value. You said you feel you are getting a good deal but it is important to understand these capped contributions and factor them in.
In London, if the relevant property value is worth less than £325,000 (£175,000 outside London) then your capped amount is zero. Above that value, the capped contribution is £15,000 in London (£10,000 outside London), unless the property value is over £1mn, in which case the capped amount is £50,000. If the property value is over £2mn, the contribution is £100,000.
The Act also includes a robust package of measures designed to ensure that those responsible finally put right the buildings they have contributed to making dangerous and that leaseholders are firmly protected from the unfair costs of remediation they previously faced.
The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.
Do you have a financial dilemma that you’d like FT Money’s team of professional experts to look into? Email your problem in confidence to yourquestions@ft.com.
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