SDLTM09750 | SDLT - higher rates for additional dwellings: Meaning of 'dwelling' - general - Para 18 Sch 4ZA FA2003

(Please note, this page was amended signficantly on 30 March 2020 and again on 13 November 2020)

For the purposes of identifying whether a purchase is a “higher rates transaction” a dwelling is defined [Para 18] as a building, or part of a building, that is –

• used or suitable for use as a single dwelling, or

• in the process of being constructed or adapted for use as a dwelling.

The gardens and grounds of the dwelling or land that is to be enjoyed with the dwelling (including buildings), for example, a detached garage, are taken to be part of the dwelling, but a transaction in such a building or land without the purchase of the actual dwelling will not be liable to the higher rates.

Example

An individual buys a plot of garden land from their neighbour. The purchase does not include an interest in one or more dwellings. The purchase is not a “higher rates transaction” and the higher rates of SDLT will not apply to the transaction.

The meaning of “Dwelling” for the purposes of the higher rates is similar to that defined from SDLTM00372 onwards.

The legislation at Schedule 4ZA refers to land that IS TO BE occupied or enjoyed with a dwelling and land that IS TO subsist for the benefit of a dwelling also being considered part of that dwelling. [Para 18(3)-(4)].

It is important to note that this relates only to scenarios where a dwelling is already in the process of being constructed or adapted, not to any subsequent intentions of the purchaser once they acquire the land.

For the purposes of the higher rates, an off-plan purchase will also count as a dwelling where:

• contracts have been exchanged for the purchase of a building, or part of a building, which is to be constructed or adapted for use as a single dwelling,

• the effective date of the transaction is determined by substantial performance of the contract, and

• at the time of the substantial performance, the construction or adaptation of the building has not yet begun.

Residential accommodation falling within any of the examples listed at section 116(2) or (3) will NOT be considered a dwelling for the purposes of the higher rates by virtue of Para 18(7). These provisions include buildings with elements of communal living such as care homes and halls of residence.