Stamp Duty Land Tax replaced Stamp Duty on 1 December 2008. Where has the time gone? Tenants who completed their leases around 5 years ago, and who have rent reviews in progress or pending may have to submit a new SDLT return to H M Revenue and Customs, as additional tax may be due. However, this only applies where there is an abnormal increase in rent (greater than 5% p.a. plus RPI). Whilst it may be unlikely that rents will increase markedly in the current climate, if rents were kept artificially low to avoid SDLT in 2003 (for example by increasing the premium), tax may be due on the review. Please do contact us if you think that you are affected. Please note that the Revenue automatically charge a £100 fine for late submission of a return, and interest will accrue on outstanding tax. 

NOTICE REMINDER FOR COMMERCIAL LANDLORDS

In the current uncertain economic climate, landlords need to be sure that they can recover any rent arrears from former tenants, if their current tenant fails to pay the rent. If a tenant defaults, a landlord cannot claim rent arrears from a former tenant, unless within 6 months of the rent falling due, he serves a Section 17 Notice on that former tenant, specifying the arrears.

However, following the recent case of Scottish & Newcastle v Raguz [2007], if a rent review is pending, Landlords must serve protective Section 17 notices within 6 months of each rent day, even though there are no arrears at that stage. This notice should say that the sum intended to be recovered is “nil”, but notifying the Tenant that there is the possibility of the rent being determined at a greater amount.

This is followed by a further notice within 3 months of the date when the rent is finally determined. This will preserve the Landlords’ right to claim the reviewed rent from a former tenant should the current tenant fall into arrears. This is clearly going to create an administrative burden for landlords with large portfolios.