Property Law 7 - Tax & Reg

Question 1

What is the basis for the SDLT/LTT calculation featuring a long lease (say 999 years)?

Answer 1

The premium

Question 2

What is the basis for the SDLT/LTT calculation featuring a short lease with market rent payable

Answer 2

Net Present Value

Question 3

SDLT is assessed on the NPV, and different percentage rates apply to the slices of the total purchase price. What are those slices?

Answer 3

• Up to £150,000, there is no SDLT payable.
• Over £150,000 up to £5 million, SDLT of 1% is payable
• Over £5 million, SDLT of 2% is payable

SDLT is rounded to the nearest pound.

Question 4

LTT is assessed on the NPV, and different percentage rates apply to the slices of the total purchase price. What are those slices?

Answer 4

• Up to £225,000, there is no LTT payable.
• Over £225,000 up to £2 million, LTT of 1% is payable
• Over £2 million, LTT of 2% is payable

Unlike SDLT, LTT is not rounded to the nearest pound.

Question 5

Do leases of up to 3 years need to be registered?

Answer 5

No

Question 6

Do leases of more than 3 years up to 7 years need to be registered?

Answer 6

Does not need to be registered. Can be noted against the landlord’s title

Question 7

Do leases of over 7 years need to be registered?

Answer 7

Yes, must be registered at the Land Registry

Question 8

What is the procedure for registering a lease?

Answer 8

• OS1 (lease of whole) or OS2 (lease of part) search should have been carried out before completion to give priority.
• The tenant applies to register the lease using form AP1 (if the landlord’s title is registered) or FR1 (if the landlord’s title is unregistered)
• A certified copy of the lease may be scanned and submitted electronically.
• If the landlord’s freehold title is charged, then a letter of consent from the lender will also be needed.
• On completion of the application, the tenant’s solicitor will receive two official copies (the new leasehold title and the updated landlord’s title)

Note that if the tenant is a company, then usually the lease will not be charged, and so there is no need to register the transaction at Companies House.