Section 35 Deeds of enlargement

(1) This section deals with a situation where it was possible to manipulate section 65 of the Conveyancing Act, 1881, to avoid stamp duty. Section 65 enables a leasehold interest to be enlarged, by deed, into a freehold interest in a case where—

• the term granted by the lease exceeds 300 years,
• there is more than 200 years of the term of the lease left to run, and
• the rent under the lease has ceased to be payable or has been released.

The avoidance involved the grant of a lease for a term in excess of 300 years. A situation would then be brought about whereby the rent would cease to be payable under that lease. This meant that the leasehold interest could then be enlarged, by deed, into a freehold interest under section 65. Ad valorem stamp duty would not have been payable on the deed of enlargement.

The avoidance is countered by making a deed of enlargement chargeable to stamp duty where the leasehold interest is created by an instrument which was executed within 6 years of the date of the deed of enlargement. The chargeable consideration is the value of the land. For the purpose of ascertaining the value of the land the term of years for which the lease is granted is disregarded.

(2) In addition, the stamp duty exemption afforded by section 82 in respect of a conveyance to a charity is not available where a deed of enlargement is involved.

Relevant Date: Finance Act 2014