Is there substantial performance for SDLT when a sitting tenant buys the freehold?

Home Forums Patrick Cannon Is there substantial performance for SDLT when a sitting tenant buys the freehold?

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  • #260 Reply
    Jack Harper
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    Has this been substantially performed as soon as the ink dries? I think not; but there might be another view.

    #261 Reply
    Patrick Cannon
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    The Stamp Office seems to operate a practice of ignoring pre-existing possession by a purchaser under a separate interestin the land.I have seen a letter from them confirming this but that was about 2 years ago.If this is still the case then possession would not cause substantial performance.

    #262 Reply
    Marc Selby
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    The Stamp Office’s practice referred to in Patrick’s above comment is still followed and, indeed, has been confirmed by the following guidance in para SDLTM07900 of HMRC’s SDLT Manual:

    “Where the purchaser already has occupation of the premises under a different interest, for example when the purchase if of a freehold and the purchaser is a tenant, substatial performance will not be triggered at the time of the contract as long as the purchaser adheres to the covenants in the lease.”

    However, the above caveat that the purchaser should adhere to the terms of the lease may onerous, since one might say that there will in practice always be some breaches of covenant, such as failiure to fully comply with the repairing obligations, for which the landlord might decide not to seek a remedy. It remains to be seen whether and, if so how, this caveat will be applied by the Stamp Office.

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