SDLTM09780 | SDLT - higher rates for additional dwellings: Condition C - general

Condition C is that the individual purchaser owns, or is treated as owning, a major interest in another dwelling, anywhere in the world, at the end of the day that is the effective date of the transaction. That major interest must have a market value of £40,000 or more and not be reversionary on a lease with more than 21 years until expiry [Para 3(4)].

An interest in a dwelling is a major interest if it is a freehold or leasehold interest [Section 117 FA 2003] and, if it is a leasehold interest, was originally granted for a term of more than seven years [Para 2(4)].

The interest in the dwelling owned by, or treated as owned by the purchaser must have a value of £40,000 or more at the date of the transaction. The valuation is the market value of the interest owned, or treated as owned by the individual in the dwelling. Loans related to the dwelling, such as mortgages, are ignored when calculating market value.

The land that has to be valued is the dwelling building itself, the garden or grounds (including buildings and structures in the garden or grounds) and any other land that subsists for the benefit of the dwelling [Para 18].

Example

A jointly owns a buy-to-let property with 4 friends. The property is worth £150,000, with A’s share being worth £30,000. A currently lives with her parents but is now looking to purchase a home to live in. A will not have to pay the higher rates of SDLT because A’s share of the buy-to-let property is under £40,000.

Para references are to paragraphs in Schedule 4ZA of the Finance Act 2003.