Mr A and Mrs A have never owned a property They now intend to buy 2 flats in one transaction, and convert them into a single home.Each flat is priced at £100k. It would seem that under Condition C in sch 4ZA para 3(4), they will have to pay HRAD on the entire consideration, since at the end of the day, they will own more than one dwelling. Consequently the first time buyers exemption will also not apply, as it is not available to transactions which are subject to HRAD. So instead of paying nil SDLT, they will have to pay £7500. Is this analysis correct?
I think that is correct but have you considered purchasing flat 1 on day 1 and flat 2 on day 2 in linked but separate transactions? They would at least avoid the higher rates on the first although they still cannot get first time buyers relief. The apportionment calculation for SDLT would be as set out in 4.26 of my Tolley’s Stamp Taxes 2019/20 edition.