News

Leading Central London Law Firm Seddons says that now is a good time for leaseholders to consider exercising their right to acquire the freehold of their building.  Apart from the general reductions in property values, 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.

Commenting on these changes, Property Dispute Resolution and Enfranchisement partner, John Midgley said, “There is now a great window of opportunity for lessees to save money on buying their freehold.  The potential benefit will be magnified for the rest of this year as the Stamp Duty Land Tax holiday on transactions up to £175,000 has been extended until 31 December 2009.  Combined with falling property prices, it is now a good time for Lessees to consider buying their freehold.”

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

If the premium payable is less than £175,000.00* then no SDLT will be payable.   However, if the premium is more than £175,000.00 then tax will be payable in accordance with the appropriate SDLT bands.

Although the Finance Act 2003 gave a similar tax relief to Right to Enfranchise Companies, these companies actually never came into existence. 

John Midgley adds, “This now rectifies an injustice in the system which has been in place for the last five years or so because of a lack of joined up thinking in government.  I anticipate that the new changes will be of particular benefit to lessees in large or valuable blocks.”