Do forum members agree that the SDLT charge of 15% (which applies where a company purchases a higher threshold property for a purpose which is not within one of the exceptions in Sch 4A FA 2003 para 5) does not apply where a company loans purchase money to the intended occupier using an equity appreciation loan? This would mean the purchase is not by the company, but the company will still benefit from any uplift in value.
Para 3 (3) seems to say that the surcharge only applies to a purchase by one of the entities identified there.
The only pitfall I can see is the possibility of the GAAR applying, but it seems to me that there is a genuine justification for having a residential property owned by its resident.
Simon Leney
Cripps LLP
The answer to this depends on whether the corporate lender is acquiring a chargeable interest in the property. “Chargeable interest” is comprehensively defined in s.48(1) FA 2003 to mean “(a) an estate, interest, right or power in or over land in [England, Wales or Northern Ireland], or (b) the benefit of an obligation, restriction or condition affecting the value of any such estate, interest, right or power”. S.48(1) provides that a “security interest” is excluded from being a chargeable interest and “security interest” is defined in s.48(3) to include an interest or right (other than a rentcharge) held for the purpose of securing the payment of money.
I would say that if the relationship between the corporate lender and the owner (who I assume is an individual) is purely contractual, and will not result in the lender acquiring any interest in the property, including an equitable interest, or an immediate right to any proceeds of sale of the property (see Anders Utkilens [1985] 2 All ER 669), the lender should not acquire a chargeable interest in the property, and in that event the 15% charge under Schedule 4A should not apply. Assuming that the relationship with the owner is purely contractual, the granting of a charge over the property to secure repayment of the loan should be a security interest, and would thus be excluded from being a chargeable interest.
Marc Selby
Laytons