Since booking fees can be significant (up to $20,000 at the top of the market), the buyer`s agreement should be reviewed by a legal expert before signing. In practice, however, it is typical for buyers to sign booking agreements before calling their lawyer. Based on the results of the government consultation, the proposal will be the subject of behavioural research, followed by a pilot project, before it can be fully implemented as a standard part of the aid process, so it will probably take some time before we know with certainty that (i) will take the form of these agreements; (ii) the way they are put on the market; and (iii) whether it is likely an effective method of reducing failed transactions. It is punishable for a person to purchase a property in a regulated sales and rental contract, unless the person is an authorized or exempt person under the Financial Services Act or if an exclusion applies: there is an exclusion if the buyer and seller/tenant are closely related. Exempt persons include local authorities and registered social donors. In the normal case where a buyer offers to allow the seller to remain in the job, there is no exception, and the buyer, if an individual, will not have the authorization or exemption under the financial services legislation. Since 1 April 2016, Scotland has its own form of land stamp duty (LBTT). Thanks to a change that came into effect with its introduction (to follow the example of SDLT), it had an additional 3% for additional home buyers. This was increased to 4% effective January 25, 2019. The LBTT is a different tax than the LDLT, although there are similarities.
The ADS is based on, but it differs from the 3% increase for the SDLT. We are witnessing an increasingly relaxed union. There is a strong argument that non-refundable and non-deductible fees are not paid for a certain type of property interest rate and are not paid for the property, but only paid for the booking contract. The booking contract gives the buyer some important rights, in particular the seller is not allowed to negotiate with other parties and must take steps to advance the sale process. The application of the rules for the 3% surcharge means that, as a general rule, someone who buys a new home before selling his old one must pay the additional stamp duty of 3% of the property tax. In most cases, when the old house is sold within three years, the 3% mark is entitled to be refunded because the “replacement exception” is likely. I wrote a blog about the replacement exception and the three-year rules. For the purposes of LTDS, the amounts paid for the booking contract and the property should be allocated on a fair and reasonable basis. It seems reasonable to distribute them in the manner in which the parties have documented them, especially since the figures are set in an open auction. This means that SDLT is due only on the price set in the contract and transfer and not on the booking fee. Before signing a booking agreement, sellers should verify that the terms comply with the code requirements and ensure that they do not enter into any other agreement for the same property with another party.