Are your tenants going to have to pay SDLT?

Hello, Under the Renters’ Rights Act, fixed-term assured shorthold tenancies will be abolished and replaced with periodic assured tenancies with no fixed end date.

Under SDLT legislation, leases which have a net present value of over £125,000 are subject to SDLT. Short leases in almost all cases will not be subject to SDLT as the rents are not high enough. Once you get rid of an end date this will change.

The problem is discussed in the KPMG briefing here: https://kpmg.com/uk/en/insights/tax/tmd-new-sdlt-burden-for-private-renters.html

They do unrealistically quote an annual rent of £48,000 in Westminster being subject to SDLT after about 3 years but projecting forward, if nothing changes, this could mean that tenants paying rents of around £20,000 annum (and rising) could be liable after 7 or 8 years.

The SDLT is low to start with but the penalties for not filing returns are expensive.

If you have along term tenant, even if you tell them now, are they going to be aware of this in 10 year’s time!

Thank you,

Simon

Editor’s note: Property118 recently published a story on the subject of tenants being handed a SDLT bill.