Stamp Duty Land Tax Treatment of non-residential property purchases

Mon 20 Mar 2017


As highlighted in our last newsletter, from April 2016, second-home buyers and buy-to-let investors have faced a new higher rate of stamp duty when buying a property.  However the higher rates of SDLT only apply to purchases of residential property.  This means that a purchaser of a non-residential property will never pay the higher rates of SDLT, even if it is later converted into residential property. Mixed use transactions, that is the purchase of residential and non-residential properties together in a single transaction, is currently considered a non-residential transaction for SDLT purposes. The government does not intend to change that treatment. (Source: H.M. Treasury)

Non-residential property includes:

•  Commercial property (such as shops or offices)

•  Agricultural land

•  Bare land (even where that land may subsequently be used for residential purposes)

•  Forests

•  Any other land or property which is not used as a residence

•  6 or more residential 

properties bought in a single transaction

•  A mixed use property (one with both residential and non-residential elements)

Shoulers are currently instructed in the disposal of a freehold retail property in Melton Mowbray which would fall within these rules.The premises would be ideal for an owner occupier looking to relocate their business whilst at the same time investing in their own commercial property. Many nowadays consider purchasing with a SIPP pension fund.   Residential property, whether it is for you to live in, a buy to let property or a holiday home, is not allowed in a SIPP but Commercial property is.  Despite the scare stories we read in the press about the unwillingness of banks to lend, they tend to be more accommodating when it comes to SIPP lending.  If your business is to be the tenant in the property, that means your business will have to pay a market rent and sign a lease, just as a third party tenant would have to do.  However you are investing in your pension rather than a rent going to a third party landlord.

Helen Montague can be contacted on 01664 560181

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