Should you pay SDLT surcharge on dilapidated property?

A ruling made in Bristol at the beginning of the year has bought this question into mind for many when purchasing additional properties which require renovating before they can be lived in.

The property in question at the First-tier Tribunal (P N Bewley Ltd v HMRC) in January was a dilapidated bungalow purchased in 2017. Due to asbestos in the property the bungalow was actually beyond the point of being renovated and was to be demolished with a new building constructed in its place.

As the bungalow was unsuitable for dwelling use at the time of acquisition (past or future use was irrelevant), the tribunal stated that it couldn’t be classed as residential and therefore, that the applicable SDLT was that for non-residential use and not the higher 3% surcharge applicable to acquisitions of dwellings by companies. This resulted in the Bewley’s being liable for the standard SDLT of £1,500 rather than the higher rate of £7,500.

If you need advice or have questions when purchasing property requiring renovations, please contact us or call 01803 403403.

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