SDLT on mixed use shopfront & dwelling

[aaron_d]

I'm looking to purchase a "mixed-use" property for the later conversion into a BTL house. Currently it's an unused village shop with residential accommodation to the rear and upstairs. 

 

A lot of guidance I can find online references "upstairs flats" but in this case the building is really all one unit - with a door separating the shop space from the residential space. 

 

There's a few facts of the property that make me think it could be appraised for SDLT under the commercial rates, however the guidance is particularly vague in my opinion - and I'd like to hear some anecdotal comparisons if any of you have any! 

 

• it is zoned as mixed-use with the council, 
• it has no active planning permission to be anything other than mixed use, 
• it hasn't been used at all for some years (~3) and is slowly falling into disrepair, 
• its water connection was disabled at time of inspection, 
• it needs a full rewire -- and also has never had a gas connection, 
• it is generally not in a great condition so would be difficult to use as a family dwelling, 
• it hasn't been inhabited as a part dwellinghouse for well over 15 years - since then it was just used as a shop + store rooms

 

However in the Finance Act (section 116) it states residential rates will apply if it is "...suitable for use as a dwelling..." -- which is where the contention is. It's water tight and presumably the water could be reinstated. 

 

Let me have your thoughts!

 

Aaron

[Mr Punter]

Sometimes you have to as HMRC.  We recently bought a freehold comprising launderette, 1 bed flat and 4 bed HMO.  We asked for multi dwelling relief.  We have completed and HMRC have not got back to us one way or the other.  Makes £7,330 difference, so I hope we get this back.

[Temp]

I assume BTL means Buy/build to Let? 

 

Sorry if you already know this but are you aware of the VAT issue? You can normally reclaim the VAT on a new dwelling or conversion but NOT if its going to be let straight away.

 

https://www.isurv.com/info/390/features/11494/taxation_vat_costs_of_building_to_rent#:~:text=The letting of residential property,it incurs on the development.

 

The letting of residential property is, however, exempt from VAT. This means that VAT need not be charged on the rents, but also that letting is outside the scope of VAT so the developer cannot recover any of the VAT it incurs on the development.

 

Its a strange quirk due to the difference between "zero" and "exempt".

 

[Ferdinand]

Remember that (as of now) the Govt Change of Use updates are in place as they won in Court.

 

But there may be an Appeal.