Commercial property, stamp duty land tax

Commercial Property and Stamp Duty Land Tax

Since the introduction of the controversial 3% Stamp Duty Land Tax (SDLT) on second residential properties we have seen a sharp increase in our investor clients purchasing commercial property and land.

The purchase of a second residential property generates SDLT of 3% on the purchase price.  This applies to any residential property over £40,000.00 so if you purchased at £100,000.00 you would pay £3,000.00 in SDLT.

Our clients are being creative in a variety of ways, for example purchasing:

  1. Open land with a view to developing and building on the land
  2. Commercial property, for example a shop, to then convert into residential apartments
  3. Derelict commercial property to demolish and use the land for residential development

These scenarios would not generate the additional SDLT on completion and would result in the investor/developer eventually owning more residential property.

HMRC give a definition of non-residential property which includes:

  • Commercial property, e.g. shops or offices
  • Agricultural land
  • Forests
  • Any other land or property which is not used as a residence
  • 6 or more residential properties bought in a single transaction

They also define a ‘mixed use’ property is one that has both residential and non-residential elements, e.g. a flat connected to a shop, doctor’s surgery or office.

Commercial Property Service

As part of our service to you, we complete all necessary Stamp Duty Land Tax forms and ensure that you pay the correct rate on your transaction.  This applies to commercial leases as well as the purchase of a commercial property.

For commercial leases, we act on behalf of Landlords and Tenants.

  • With a Landlord client we usually meet at the outset and discuss the Heads of Terms, we then draft the commercial lease and send this to the Tenants solicitor for approval.
  • With a Tenant client we ensure the Heads of Terms match the draft Lease provided and advise the client on the various clauses and legal terms. We’ll submit searches for a Tenant client where necessary and we also advise at the outset on the SDLT payable upon completion.

We have experience in acting for clients selling, buying and leasing shops, hotels, public houses and warehouses.

We can also advise on investment purchases with a return which can includes the purchase of a room in student accommodation, the purchase of a room in a care home and the purchase of a room in a hotel.

Please contact us for a free initial consultation for all your commercial property conveyancing legal requirements.

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