Conveyancing Explained

A new relief was put in place for first time buyers for completions taking place on or after 25th March 2010, for a period of two years.

The term “first time buyer” is defined as follows;-

1. The purchaser (or all purchasers for more than one) have never owned residential property before in the UK (with the exception of a lease with less than 21 years to run) or the equivalent anywhere else in the world.
2. They intend to live in the property, using it as their only or main residence.
3. The purchase price of the property is 250,000 pounds or less.

Just to remind you that as of 1st January 2010, we revert to the previous Stamp Duty threshold rates. You can find details on the website of HM Revenue & Customs here:-

http://www.hmrc.gov.uk/so/rates/rates-mar08-sep08.htm

You can also find the HMRC Stamp Duty Land Tax online calculator here;-

http://www.hmrc.gov.uk/so/new-sdlt-calculators.htm

As you may be aware, due to the current market difficulties, the Government announced on 3rd September 2008 that for one year, the stamp duty land tax threshold would be increased from £125,000.00 to £175,000.00.

This means that if you are buying a property for £175,000.00 or less and you complete the transaction before 2nd September 2009, you will be exempt from the requirement to pay stamp duty land tax.

On current information, it appears that on 2nd September 2009, the SDLT bands will revert to the usual thresholds i.e. £125,000.00 or less = no duty, £125,001.00 to £250,000.00 = 1%, £250,001.00 to £500,000.00 = 3%, £500,000.00 plus = 4%.

If you’ve bought a property as tenants in common (see my separate article) then in addition to a Declaration of Trust signed by both parties, you should also both consider making a Will. This is because the rule of survivorship does not apply to a tenancy in common i.e. your share in the property will not automatically pass to the other owner if you do pass away and vice versa.

Your conveyancing solicitor can advise you on the individual cost of making a Will, expect to pay between 50-150 pounds depending upon where you live. Generally speaking, the further North you are, the cheaper the costs will be!

Even if your purchase is not subject to Stamp Duty Land Tax, a form still has to be filed with HM Revenue & Customs to confirm this. In any case, the form, called a Land Transaction Return Form, must be filed following completion. Your legal duties are as follows;-

1. It is your duty, and where your solicitor acts for more than one person, your duty jointly and equally, to ensure that the form is submitted to HM Revenue & Customs within a time limit of 30 days. It is usual practice for your solicitor to send the form on your behalf.
2. There are penalties for failure to submit the form on time (£100 for up to three months delay, thereafter £200 together with tax related penalty if there is a failure to file for twelve months).
3. If your solicitor completes the form on your behalf and it is usual practice for him to do so, the form is completed on the basis of information provided by you and you are responsible for the accuracy of the form and for any penalty which may be incurred if the form is returned for correction.
4. Failure to submit the form on time may result in delays in registering the transaction at HM Land Registry, who will not accept the application without an accompanying certificate from HM Revenue & Customs.
5. You are liable for payment of any tax due and where there is more than one of you, that liability is joint and several.
6. If your solicitor is named on the form as “tax agent” and it is usual practice for this to be the case then the solicitor is merely the body with whom HM Revenue & Customs will communicate and to whom any correspondence will be sent.
7. HM Revenue & Customs may enquire into the transaction and you may be liable to pay additional tax after any such enquiry.

If you want to check whether your property is exempt from Stamp Duty Land Tax, then you can use a free postcode search on HM Revenue & Customs’ website at www.hmrc.gov.uk/so/pcode_search.htm; however, there are still specific requirements for exemption even if you receive a positive result, so don’t rely on this without checking first with your conveyancing solicitor.