SDLTM00475 - Scope: what is chargeable: land transactions: garden or grounds – legal factors and constraints

(This page was introduced on 25 June 2019)

Considering whether land is garden or grounds - Legal Factors and Constraints

Land may be subject to legal conditions – whether public or private law – that inhibit or permit certain uses. These conditions will be relevant in assessing its relationship to the building although it is likely that where these conditions are not being respected for any reason, actual use will prove more helpful than theoretical use.

Planning consent or restrictions are frequently encountered in this context. Where permission is in place for non-residential use or under planning law non-residential use is lawful this is an indicator of the land not being ‘garden or grounds’. However planning law by itself is not determinative and actual use will normally be given greater weight. For instance:

  • Where planning regulations prohibit commercial use but these are being breached by longstanding commercial use (particularly if the actual use is unlikely to be challenged by the planning authority) then this would indicate the land is not likely to be residential; or
  • Alternatively where commercial use is permitted, but the land is actually being used for residential purposes then this would be an indicator that the land is likely to be residential.

Private law matters such as terms of leases, restrictive covenants, contractual restrictions or easements will also be relevant. In contrast whether the property is registered under one land registry title or in more than one title will rarely be of relevance.

If the building owner has no rights to access land, this can be an indication of non-residential nature, particularly if coupled with another factor such as geographical separation (see SDLTM00470). Conversely, if physically separated land can be accessed via an easement, this indicates it could be part of the ‘garden or grounds’.

“Hindrances” on the land, such as rights of way for ramblers, or access by utility companies to pylons etc. will not usually prevent land from being part of the ‘garden or grounds’.

The receipt of Basic Payment Scheme (BPS) payments (BPS on GOV.UK) for the land would be an indicator of commercial use of the land being considered, but does not, by itself, mean that the land is necessarily non-residential in nature.

Examples of factors which may indicate non-residential land would include where:

  • a non-domestic rateable value for the property has been assessed;
  • non domestic rates are collected; or
  • the property has been classified as agricultural land and buildings for the purposes of exemption from business rates.

HM Revenue and Customs (HMRC) will closely scrutinise arrangements which appear to have been put in place for the purposes of changing the Stamp Duty Land Tax (SDLT) residential/non-residential status of land.