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Example 1

Mr and Mrs S, a married couple, each own a residential property, with neither having any interest in the other鈥檚 property.听 They both live in the property owned by Mrs S; the property owned by Mr S is rented out. Mrs S is selling her property and they are jointly purchasing a new one, which will be their new main residence.听 Mr S will retain his rented out property.听

Looking at conditions A to鈥疍: -鈥�听

• The chargeable consideration is听拢40,000听or more听and the interest is not subject to a lease, so conditions A and B are met for the major interest purchased.鈥�听

Conditions C and D relate to the purchaser.鈥�鈥�听

• Condition C is met by Mr S 鈥� he owns a major interest in another dwelling.听Mrs S does not meet condition C as she does not own a major interest in another dwelling.听

So鈥痺e look at condition D for Mr S.听 We do not need to consider condition D for Mrs S as she has already failed condition C.听 The new property is replacing Mr S鈥檚 only or main residence, as the test is passed if the previous main residence which is sold belonged to the purchaser鈥痮r their spouse or civil partner.鈥疶he replacement test is failed for Mr S and so the transaction is not a 鈥渉igher rates transaction.鈥濃��鈥�听

The higher rates will not apply to the joint purchase by Mr and Mrs S of a new main residence.鈥� As they are married and have both lived in the property owned by Mrs S as their main鈥痳esidence听Mr S will听treated as replacing their main residence.鈥�听 Mrs S only owned one property at the end of the day of the transaction.鈥�鈥�听

However, if Mr and Mrs S had not previously lived together in Mrs S鈥檚 old house, condition D would not be met for Mr S as the old house would not be his previous main residence, and the transaction would comprise a 鈥渉igher rates transaction.鈥濃��听

Example 2听

Mr P and Ms B, who are not married to one another, each own a residential property, with neither having any interest in the other鈥檚 property.鈥�鈥� They both live in the property owned by Ms B:鈥� the property owned by Mr P is rented out.鈥� Ms B is selling her property and they are jointly purchasing a new one, which will be their new main residence.鈥� Mr P will retain his rented-out property.鈥�听

As鈥痠n鈥痚xample 1,鈥痗onditions A and B relate to the interest purchased and are met.鈥�鈥�听

Condition C is met by Mr P as he owns another property on the day of purchase. Ms B does not meet condition C, but it is only necessary for one purchaser to meet the tests听for the transaction to comprise a higher rates transaction.鈥�鈥�听

So,鈥痺e look at condition D. Ms B fails this test as she is replacing her main residence, but Mr P passes this test as he is not replacing his main residence. Although he lived in the house previously owned by Ms鈥疊鈥痟e had no interest in it and as they are not spouses/civil partners he is not treated as disposing of his main residence by virtue of Ms B disposing of it.鈥�鈥�听

So,鈥痠n this example the transaction is a higher rates transaction.鈥�听

鈥�听

The higher rates will apply to the joint purchase of a new main residence by Mr P and Ms B.鈥� As they are not married (or in a civil partnership) Mr P will not be treated as replacing his main residence as,听even though he has been living in the property owned by Ms B,鈥痟e has no interest in the property Ms B is selling.鈥�鈥�听

Example 3听

Mr T owns both a main residence and a buy-to-let property.鈥� He is in the process of purchasing a new main residence.鈥� He intends to keep his current main residence and rent it and sell his buy-to-let property, although the sale may not take place until after the purchase of his new property.鈥�鈥�听

The higher rates will apply to the purchase of the new property as following the purchase:鈥�听

Mr T will own an additional residential property and is not replacing his main residence; and鈥�听

Mr T will not be able to claim a refund when he sells his current buy-to-let property as refunds are only available where a previous main residence has been replaced.鈥�听

Example 4听

Ms G currently owns two buy-to-let properties, which she has owned for鈥痑 number of鈥痽ears.鈥� She sold her previous main residence six months ago and moved temporarily into one of her buy-to-let properties, whilst looking for a new main residence.鈥�鈥疭he buys a new main residence, moves into it and rents out her buy-to-let property to tenants again.鈥�听

Ms G will be treated as replacing her main residence if the property she sold six months ago was her only or main residence and听she lived in it as her only or main residence at some time in the past 3 years.鈥� The fact that she lived in one of her buy-to-let properties in the interim period does not affect this.鈥�听

Example 5听

Mr & Mrs C currently own a mixed鈥痳esidential and non-residential鈥痯roperty, a shop with a flat above, both of which are rented out.鈥� They听have lived for over three years听in rented accommodation but are in the process of purchasing a new property which will be their main residence.鈥�鈥�鈥�听

The higher rates will apply to the purchase by Mr and Mrs C as they already own an interest in another residential property: the flat above the shop.鈥�听

Example 6听

Ms D currently owns two residential properties 鈥� her main residence and a 25% share in a second property that she owns jointly with 3 friends, each having a 25% share in the property鈥痸alued at over 拢40,000.鈥� Ms D now wishes to purchase one of her friend鈥檚 25% share in the jointly owned property.鈥�鈥�听

The higher rates will apply, as Ms D will be purchasing a major interest in a property, is not replacing her main residence and owns an interest in another property.鈥�听She has not lived in the property for the last three years to be able to rely on the rule explained at SDLTM09814 (adding to existing interests) and illustrated in Example 7 below.听

Example 7听

Miss L owns two residential properties 鈥� a buy-to-let,鈥痑nd a 50% share in a property that she owns jointly with her sister.鈥� The jointly owned property is her main听residence,听and she has lived there for the last three years.鈥� She is considering purchasing the remaining 50% of her main residence from her sister.鈥�鈥�听

For purchases before 22 November 2017, the higher rates would鈥痑pply as Miss L is purchasing a major interest in a residential property, is not replacing her main residence and owns an interest in another residential property.鈥�听

For purchases on and after鈥�22 November 2017, the higher rates would not apply as Miss L's transaction will be disregarded because she is increasing her interest in her main residence鈥�- see鈥�SDLTM09814鈥痜or conditions.鈥�鈥痆Para 7A].鈥�鈥�鈥�

Example 8

Mr and Mrs X jointly own two properties; they live in one as their main residence and rent the other out.鈥�鈥� Mr X is transferring his share in their main residence to his wife, who will take over sole responsibility for the mortgage.鈥�鈥�鈥�听

听On such a transfer听before 22 November 2017, the higher rates听would have applied听as Mrs X听owned听an interest in another residential property and听was听not replacing her main residence.鈥�听The higher rates听would have applied听to the value of the听existing听mortgage taken over by Mrs X.鈥�听

听On such a transfer听on and听after鈥�22听November 2017, the higher rates听do听not apply as鈥疢rs听X's鈥痶ransaction will be disregarded because she is purchasing solely from her听spouse鈥�- see鈥�SDLTM09820鈥痮r听conditions.鈥�鈥痆Para 9A].鈥�鈥�鈥�听

Example听9

Ms Q is purchasing the house next door to her current home, which she intends to merge with her current home.鈥�鈥�鈥�听

The higher rates will apply as following the purchase Ms Q will own an additional residential property and is not replacing her main residence.鈥� A refund of the higher rates cannot be claimed once the work to merge the two properties is complete as refunds are only available where a previous main residence has been鈥痙isposed of. In this example the previous main residence is still owned in an altered form.鈥�鈥�鈥�听

Example 10听

Mr E owns two properties, both flats: he lives in one and rents out the other.鈥� He is currently in the process of extending the lease on his main residence.听

鈥�鈥�鈥�听

听On the purchase of such a lease extension before 22 November 2017, the higher rates would have鈥痑pplied as Mr E is purchasing a major interest in a residential property,鈥痠s not replacing his main residence and owns an interest in another鈥痳esidential property.听

On such a purchase on or after 22 November 2017, the higher rates鈥痺ill鈥痭ot鈥痑pply if Mr E鈥痠s increasing his interest in his main residence听and also听meets the relevant conditions - see for鈥痶hose鈥痗onditions. 鈥痆Para 7A]." 鈥�听

Example 11

Mr K currently owns one buy-to-let property and is in the process of purchasing another one.鈥� He lives in rented accommodation.鈥� He may consider selling one of the properties within the next couple of years.鈥�鈥�听

The higher rates will apply to the purchase of the second buy-to-let property as following the purchase Mr K听will own an additional residential property and is not replacing his main residence.鈥� A refund will not be available if Mr K subsequently sells one of his buy-to-let properties as a refund is only available where a main residence has been replaced.鈥�鈥�鈥�听