SDLTM00395 | Scope: what is chargeable: land transactions: Residential Property– Dwellings (Further Considerations (2))

Mixed Residential/Non-Residential Property (Continued)

The test of whether the building is used or suitable for use should be applied at the time of the land transaction (see SDLTM00360). Although the phrase ‘suitable for use’ alludes to potential rather than actual use, the intention of the parties is not relevant to this category of the definition. The test is whether the building is ‘suitable for use’ at the time of the land transaction, not what the vendor/purchaser intend to use the building for. Historical use is likely to provide a guide as to what a building may be suitable for, but historical or previous use of a building is not definitive of what it is suitable for use as at the present time, especially if adaptations have taken place.

If a building with an area which does not fit the definition of residential property is sold as a single building, then it ‘consists of or includes land that is not residential property’ and will therefore be taxed at the non-residential rates. This is the case regardless of the relative size of the residential and non-residential areas.