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SDLT on a leasehold holiday chalet

Whether SDLT is payable

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A client and her husband are purchasing a leasehold holiday chalet in Kent.  it is a fixed wooden structure built in 1985 and is on a dedicated holiday park.  The permitted occupancy is 37 weeks pa but there is an option to have the lease amended to 47 weeks which they propose to do. The client lives in job related accommodation and they also own a house that is designated as their PPR.

Their solicitor has raised the question of SDLT and he doesn't know the answer.  He has quoted nil SDLT on the basis that the holiday chalet is not a dwelling and there being restrictions on occupancy.  He has suggested, however, that HMRC rules do suggest that SDLT can be charged at residential rates if a property is suitable for use as a dwelling.  If this is the case, not only would SDLT apply but also the additional 3% as they already own another property.  The additional 3% alone amounts to £2,100.

Any thoughts?

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Psycho
By Wilson Philips
08th Jun 2021 13:58

Is the solicitor's nil view based on the premise that the consideration is below the threshold for non-residential property? Or does he think that SDLT applies only to dwellings? Hopefully the former but it's not clear from the question.

To answer the question, though, and based on HMRC's commentary, I would say that the 37-week restriction would strongly favour the view that the property is not suitable for use as a dwelling. Arguably any restriction on occupation should 'work', but limiting occupation by only 5 weeks may cause HMRC to argue that the building is in fact suitable for use as a dwelling.

Remember that it is the use at the transaction date that counts, not intended use. So if,at the time of purchase, the occupation is limited to 37 weeks I would disregard the option to extend it to 47 weeks, even if there is a firm intention to exercise that option later.

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