SDLTM09865 | SDLT - increased rates for non-resident transactions: Meaning of dwelling - para 20 Sch 9A FA03

(All legislative references are to Sch 9A FA03 unless otherwise stated)

For the purposes of identifying whether a purchase is a “non-resident transaction”, a dwelling is defined as a building, or part of a building, that is:

• used or is suitable for use as a single dwelling; or

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

Further guidance on which factors support the existence of a single dwelling can be found at SDLTM00410 – SDLTM00430.

Land that is, or is to be, occupied or enjoyed with the dwelling, such as a garden or grounds (including any building or structure on such land), is taken to be part of the dwelling (paragraph 20(3)). This will usually be a question of fact depending on the individual circumstances of each case.

Land that subsists, or is to subsist, for the benefit of the dwelling is also taken to be part of the dwelling (paragraph 20(4)). This applies to an interest in land which is not contiguous with the dwelling and its garden or grounds, for example, a separate garage in a block.

The words “or is to” in the sentences above relate to the situation where a dwelling is in the process of being built, so land is to be occupied or is to subsist for the benefit of that dwelling once it has been built.

However, a transaction in such a building or land without the purchase of the actual dwelling is not liable to the surcharge, as such a transaction would not meet the condition at paragraph 2(1)(b) which requires the main subject matter of the transaction to consist of a major interest in a dwelling or dwellings.

It is important to note that the rules for determining what counts as a dwelling for the purposes of the surcharge relate only to scenarios where a dwelling is already in the process of being constructed or adapted, and not to any subsequent intentions of the purchaser once they acquire the land.

For the purposes of the surcharge, an off-plan purchase will 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.

The meaning of “dwelling” for the purposes of the surcharge is similar to that defined from SDLTM00372 onwards. However, residential accommodation falling within any of the examples listed at section 116(2) or (3) FA03 will not be considered a dwelling for the purposes of the surcharge by virtue of paragraph 20(7). These provisions include buildings with elements of communal living such as care homes and halls of residence.