Freehold and Leasehold in S1 Property Act 1915
Joint tenants: share equal ownership of the property and have the equal,
undivided right to keep or dispose of the property. If you own your home
as joint tenants, then if one partner dies, the other automatically
becomes the sole owner of the home
Tenants in common: each owns a set share - this can either be half each,
or a defined percentage.
FREEHOLD PROPERTY
THE MAIN LANDMARK STAGES
- Parties agree terms
- Parties exchange contracts bound to complete
o Buyer can carry out pre-completion searches
- Parties complete
o Docs complete transfer title to buyer
o Money paid
o Can take place same time as exchange of contract
o Sides tie up loose ends: seller pays remaining mortgage
(normally gives undertaking to do this). Buyer must ensure
land tax + SDLT is paid
o Register buyer as new owner
- VAT:
o Exempt – not taxable
Freehold sales of commercial property more than 3
years old are exempt, but subject to option to tax
VAT sensitive buyers: where company cannot reclaim
because it’s not making a taxable profit so cannot offset
input vs. output (i.e. banks, insurance companies)
o Zero rated – taxable at 0% (allows seller to reclaim input tax)
Sale/lease of new house by person constructing it = 0
rated
o Standard rated – taxable at 20%
Sale of ‘new’ freehold commercial building (new =
completed w/i 3 years prior to the sale) = standard rated
- SDLT:
o SDLT is charged on property transactions, freehold and
leasehold, residential and commercial
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Joint tenants: share equal ownership of the property and have the equal,
undivided right to keep or dispose of the property. If you own your home
as joint tenants, then if one partner dies, the other automatically
becomes the sole owner of the home
Tenants in common: each owns a set share - this can either be half each,
or a defined percentage.
FREEHOLD PROPERTY
THE MAIN LANDMARK STAGES
- Parties agree terms
- Parties exchange contracts bound to complete
o Buyer can carry out pre-completion searches
- Parties complete
o Docs complete transfer title to buyer
o Money paid
o Can take place same time as exchange of contract
o Sides tie up loose ends: seller pays remaining mortgage
(normally gives undertaking to do this). Buyer must ensure
land tax + SDLT is paid
o Register buyer as new owner
- VAT:
o Exempt – not taxable
Freehold sales of commercial property more than 3
years old are exempt, but subject to option to tax
VAT sensitive buyers: where company cannot reclaim
because it’s not making a taxable profit so cannot offset
input vs. output (i.e. banks, insurance companies)
o Zero rated – taxable at 0% (allows seller to reclaim input tax)
Sale/lease of new house by person constructing it = 0
rated
o Standard rated – taxable at 20%
Sale of ‘new’ freehold commercial building (new =
completed w/i 3 years prior to the sale) = standard rated
- SDLT:
o SDLT is charged on property transactions, freehold and
leasehold, residential and commercial
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