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SDLT Savings for Pre-Settled Status Holders in the UK Property Market
For individuals holding pre-settled status under the EU Settlement Scheme, purchasing property in the UK may offer distinct financial advantages, particularly regarding Stamp Duty Land Tax (SDLT).
One of the most significant benefits is the potential to mitigate the additional 2% SDLT surcharge applied to non-UK residents. This exemption can represent substantial savings, particularly in high-value transactions, and provides pre-settled status holders with a financial edge in the competitive UK property market. Unlike other foreign buyers, those with pre-settled status could be treated as UK residents for SDLT purposes provided that they have spent 183 days in the UK in the year before completion. This will assist in reducing overall costs and allowing more capital to be directed towards the purchase or investment. If you don’t quite make up the 183 days before completion, you can claim a refund of the 2% payment if you spend 183 days out of a period of 365 days in the UK in the first year after your completion date.
This advantage, combined with the stability pre-settled status offers in accessing competitive mortgage products and navigating legal requirements, makes it an attractive position for property buyers. However, expert legal advice is essential to ensure eligibility and compliance with SDLT rules, safeguarding these savings while streamlining the purchasing process.
For those with pre-settled status, understanding and leveraging this exemption can be a pivotal step towards securing a future in the UK property market while minimising costs.
If you require immigration advice, please contact Jayesh Jethwa using the form below. If you require residential real estate advice, please contact Meera Malde using the form below.
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Five Things To Do Before Selling A Flat
Thinking about selling your leasehold property? Here are five tips to kickstart your sale process.
1. Find Your Solicitor
The importance of finding your perfect match cannot be overestimated. The human factor is at the core of a seamless and transparent process. Good practice is to follow recommendations from friends and family (or your agent), review firm’s/lawyer’s website/profile, and of course compare quotes and establish the law firm’s usual response and transaction times. I would always recommend speaking with your solicitor prior to instructing them: a video call is a good starting point especially if you are based overseas.
2. Complete Your Client Onboarding
- If you are already an existing client with your chosen firm, this point may be ticked off already. If not, then make sure you complete your client onboarding in timely manner: provide your ID and proof of address (could be a utility bill or bank statement dated not less than three months from the point of submission).
- Have a look through your paperwork and data files: it is beneficial to provide various property documents which are in your possession to your solicitor at this stage too. These documents could be electrical installations certificates, Gas Safe certificates, NHBC, any planning or building documentation. This means that your solicitor will be able to provide these to the buyer’s solicitor with the initial contract pack, as opposed to raising with you at a later stage.
- If you have a mortgage, do provide your latest mortgage statement to your solicitor too, so that they liaise with your lender to obtain the up-to-date redemption figure (you will usually be redeeming your loan on completion).
3. Complete Your Leaseholder Deed of Certificate and Serve On The Landlord
If your property is a flat in a high-rise block, the recent legislation called the Building Safety Act 2022 (BSA 2022) will require you to serve a leaseholder deed of certificate (your solicitor will advise you, if required and will assist in preparing the document). The leaseholder deed of certificate is served on your landlord, and the landlord will in turn have four weeks to prepare their landlord’s certificate. The leaseholder deed of certificate will confirm whether your lease qualifies for protections under BSA 2022 (with respect to fire safety remediation works). It is therefore good practice to complete and serve the deed even before you have a buyer.
4. Complete Your Protocol Forms
Your solicitor will provide you with Law Society forms to complete and provide the relevant documentation referred to in the forms. These forms consist of standard questions about your property and must be completed by the seller. If you have questions on the forms, it is advisable to raise these at early stages of the sale process.
5. Last, But Not Least — Review and Confirm Your Timetable/Preferences With Your Solicitor and Estate Agent
Will you require a certain period between exchange and completion? Inform your lawyer at the start of the process. Would you prefer to exchange and complete on the same day? Your lawyer can propose this to the other side. Or are you planning an overseas trip, and your Internet connection may be on and off — do let your lawyer know beforehand, and we can make sure you sign sale paperwork before the trip, or agree digital signing with your buyer, not to delay the process. As always, communication is key, and this works both ways.
Sales and purchases are a stressful process but good preparation and working with a good team can ease the worry.
Nargiz Abdullayeva is a Senior Associate in our Residential Property Team. Nargiz has over 8 years of experience in high-value real estate transactions. To discuss any of the points raised in this article, please contact Nargiz Abdullayeva or fill out the form below.
Pay 5% Deposit With The Own New Rate Reducer Scheme
Launched in February 2024, the Own New Rate Reducer scheme is designed to make purchasing a new build home more affordable. Through this scheme, buyers can secure a lower mortgage rate compared to traditional options on the open market.
How It Works
When you choose a new build property, the developer agrees to contribute either 3% or 5% of the purchase price as an incentive. This contribution, similar to other perks like discounted upgrades or stamp duty coverage, is directed to your mortgage lender via Own New.
As a result, your interest payments are reduced by the equivalent value for the first 2 to 5 years, depending on your mortgage term, resulting in lower monthly mortgage payments. The scheme is even available to those with a high deposit, of up to 40% which could produce an interest rate as low as 0.99% for an initial period.
Developer-Friendly Incentives
House builders have traditionally offered incentives or discounts to buyers to secure a sale. Own New has joined up with over 60 leading homebuilders, including Barratt Developments, Berkeley Group, and Persimmon Homes, to provide this alternative incentive option.
Available Lenders
The Own New Rate Reducer scheme launched with Halifax and Virgin Money, with other lenders expected to join soon.
Downsides?
A scheme that sounds almost too good to be true and helps thousands of young professionals and other first-time buyers to get onto the property ladder. We are expecting to see a lot more use of the scheme.
Buyers should consider some downsides:
- The scheme only applies to purchasing a new-build property from a developer approved by the scheme.
- If your equity in the property is low, difficulties could be encountered when the buyer comes to remortgage the property, especially if prices have not risen over the period.
- Buyers will have to budget for a potential jump in interest payments when the initial period ends.
- Often buyers of new builds are paying a premium price for having a brand new home, as such older properties may still remain more affordable.
- Only a limited number of lenders are currently partaking.
Eligibility
This scheme is open to anyone purchasing a new build property through a homebuilder approved by the scheme and not just first time buyers.
Get In Touch
Quastels’ real estate team brings extensive experience in handling new build purchases. We have collaborated with many of the home builders and mortgage brokers involved in the Own New Scheme.
Our team is qualified to guide you through the process of purchasing a new build property.
For financial information and eligibility, you must of course, contact your mortgage broker.
To discuss any of the points raised in this article, please contact Gabrielle Barnaby or fill out the form below.