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Buried in the small print of the recent Budget is a measure to provide Stamp Duty Land Tax (SDLT) Relief for the Collective Enfranchisement of a building’s freehold.

The Government had previously legislated for this measure in the Finance Act 2003, but it was only available for Right to Enfranchise Companies, a purchasing vehicle which has not yet come into legal existence.

This meant that the tax relief was not available for nominee purchasers under the Leasehold Reform Housing and Urban Development Act 1993.

The “new” relief will be available for Collective Enfranchisement transactions on or after 22 April 2009.   The SDLT will be calculated at the applicable rate which will be determined by dividing the total premium by the number of flats involved.

If the resulting figure is then less than £175,000.00 (up to 31 December 2009) then no SDLT will be payable.  However, if the resulting figure is more than £175,000.00 then it would be payable in accordance with the appropriate Stamp Duty Land Tax bands.

Commenting on these changes, Property Dispute Resolution Partner John Midgley said, “This measure will be of considerable benefit to lessees who are looking to acquire the freehold of their building.  The potential benefit to the leaseholders will be magnified whilst the Stamp Duty Land Tax holiday on transactions up to £175,000.00 has been extended until 31 December 2009.  Therefore now is a good time for lessees to consider buying their freeholds”.