Introduction Background Note
6.Leaseholders in blocks of flats have certain statutory rights to acquire the freehold of the block. These are a right of first refusal if the landlord wishes to sell (under Part 1 of the Landlord and Tenant Act 1987) and a right to require the landlord to sell the freehold if a majority of the leaseholders request it (under Chapter 1 of Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993). These acquisitions are undertaken by nominees or appointees (either an individual or a company) on behalf of the participating leaseholders.
7.Stamp duty land tax (SDLT) is charged at higher rates for higher levels of consideration. This means that individual leaseholders may pay a higher rate of SDLT in respect of their contribution to the purchase than would be the case if they were able to purchase the freehold of their individual flat.
8.SDLT legislation therefore includes a relief which sets the rate of tax charged according to the consideration given for the freehold divided by the number of flats in respect of which the right is being exercised.
9.When SDLT was introduced, legislation was being enacted to provide that the right under the 1993 Act must be exercised by a statutory Right to Enfranchise (RTE) company. The relief therefore refers to purchases by a RTE company. However, the RTE company provisions have never been commenced, so the SDLT relief could not be claimed.
10.This section removes the references to RTE companies and allows the relief to be claimed.