The rate at which SDLT is payable depends on the price of the property. Properties between £125,000 and £250,000 attract a rate of 1%; those costing more than £250,000 and up to £500,000 attract a rate of 3%, whereas the rate applying to properties in excess of £500,000 is 4%.
This makes buying land and property a costly business. Stamp duty land tax on a £300,000 amounts to £9,000, whereas for a £600,000 property, the SDLT bill weights in at a hefty £24,000.
The high cost of SDLT mean that opportunities to purchase property without an associated SDLT charge are worth a look. From the Government’s perspective, SDLT is a handy political tool which can be used to influence property purchasing decisions in accordance with wider political aims and it is a tool which has frequently been used to such effect. For example, temporarily removing stamp duty provides a boost to a sluggish property market, reducing SDLT in certain disadvantaged areas provides and incentive to buy in those areas, and so on.
Environmental concerns are high on the political agenda and the tax system is widely used to encourage `green’ behaviour. SDLT is no exception and a new relief provides purchasers with an incentive to buy new energy-efficient properties. The relief, which applies to the first acquisition of a dwelling which is a zero-carbon home, aims to kick-start the market for zero-carbon homes, encourage micro generation technologies and to raise public awareness of the benefits of living in zero-carbon homes.
What Is A Zero-Carbon Home?
A home is defined as a zero-carbon home if it is energy efficient in relation to the heat loss parameter, dwelling Co2 emissions rate and net CO2 emissions. The criterion that must be met is shown in the table below.
Aspects of Energy Efficiency
Heat Loss Parameter (HLP)
The HLP of the dwelling calculated in accordance with the approved methodology must be no more than 0.8 Watts per square metre Kelvin (W/m2K [*** NOTE TO EDITOR – 2 SHOULD BE A SUPERIOR 2 AS IN SQUARED METRES]
Dwelling CO2 emissions rate (DER)
The DER over the course of a year calculated in accordance with the approved methodology must be nor more than zero kilograms per square metre (kg/m2/year)
Net CO2 Emissions
The net CO2 emissions from the dwelling over the course of a year calculated in accordance with the approved methodology must be no more than zero kilograms per square metre (kg/m2/year)
The question as to whether these requirements are met is determined by an assessment of the dwelling by an accredited assessor.
Zero-carbon home certificate
A home that meets the criteria for a zero-carbon home will be awarded a zero-carbon home certificate by the accredited assessor. This certificate provides the evidence that the conditions have been met.
A zero-carbon home certificate will include the following information in relation to the dwelling:
· address, including postcode;
· that the dwelling is a zero-carbon home; and
· in relation to dwellings in England and Wales only, the unique identifying number from the energy performance certificate if an energy certificate has been produced.
The certificate must also include certain information in relation to the assessor issuing the certificate, including his or her full name, the name and address of the accredited assessor’s employer, or, if the assessor is self-employed, his or her trading name and address and, in relation to dwellings in England and Wales only, the accreditation scheme, if any, to which the assessor belongs.
The SDLT relief only applies to the first acquisition of a zero-carbon home. Subsequent purchases of the property attract SDLT at the normal rates. Thus, the relief aims to increase the housing stock of zero-carbon homes as by restricting the relief to the first acquisition, energy-conscious purchasers are given an incentive to buy new.
For the purposes of the relief, the first acquisition is the simply the acquisition of a dwelling that has been constructed for use as a single dwelling and which has not previously been occupied.
The relief that is given depends on the purchase price of the property. Where the chargeable consideration is not more than £500,000 and does not include rent, no SDLT is payable on the first acquisition of a zero-carbon home where the acquisition is made on or after 1 October 2007 and before 1 October 2012. Likewise if the consideration includes rent and consideration other than rent and the consideration other than rent is not more than £500,000, no SDLT is payable.
However, if the chargeable consideration is £500,000 or more and does not include rent or the consideration other than rent is £500,000 or more and the acquisition is made within the same time frame, the amount of SDLT payable is reduced by £15,000.
This relief offers purchasers of zero-carbon homes the opportunity to benefit from considerable savings.
Billy purchases a zero-carbon new zero-carbon home from a developer. He agrees a purchase price of £400,000 and the sale completes on 1 December 2007.
The property is awarded a zero-carbon home certificate by the accredited assessor.
The conditions for SDLT relief for zero-carbon homes are met. As the chargeable consideration is less than £500,000 the transaction is exempt from SDLT.
The purchase of a property not meeting the zero-carbon conditions for the same price would attract SDLT of £12,000. Thus by buying a new zero-carbon home Billy has saved SDLT of £12,000.
Billy subsequently sells the property for £550,000. The sale completes on 1 January 2012. However, the purchasers must pay SDLT at the normal rate as the relief is not available for subsequent purchases of a zero-carbon home.
Wendy and Jack purchase a zero-carbon home for £1 million. The sale completes on 1 August 2009. The home is purchased new from a developer and has not been lived in previously.
The accredited assessor issues a zero-carbon home certificate in respect of the property.
In the absence of the relief for zero-carbon homes (and assuming current rates of SDLT apply), Wendy and Jack would be liable for SDLT of £40,000 (4% of £1 million) in respect of the property. However, as they meet the conditions for SDLT relief in respect of zero-carbon homes, the actual SDLT payable is reduced by £15,000 to £25,000.
Those looking to buy a new energy efficient home could find that the SDLT relief for zero-carbon homes gives them the required incentive to forge ahead with the purchase. Although currently energy-efficient homes are more expensive to buy as developers seek to cover the additional building costs, they provide the purchaser with considerable energy cost savings as compared to traditional homes. The SDLT relief, which is available for a limited five-year period, may be enough to tempt potential house buyers to think green. At least, that is what the Government hopes.