In most conveyancing purchase transactions a seller’s conveyancing lawyer will ask the seller to complete a Fixtures and Fittings List. This will normally be sent to the purchaser’s conveyancing lawyer by the seller’s conveyancing solicitors when issuing the draft contract. This list will contain details of any items of fittings and contents included with the sale of the property and may contain additional details of items offered for sale by the seller as separate Chattels.
It is a good idea to advise your conveyancing lawyer as early as possible in the conveyancing transaction of any fittings and contents that have been agreed to be included with the sale of the property so that these are reflected in the completed Fittings and Contents List. If you have agreed to purchase any additional items at additional cost this sum will normally form the “chattels” price in the contract.
All amounts payable for fixtures and fittings under the terms of the conveyancing contract must accurately reflect the value of any such items and in the event that the purchase conveyancing transaction is subject to scrutiny at any time following completion by Her Majesty’s Revenue and Customs, you must be able to demonstrate that the price paid for chattels was fair and accurate and not done to avoid payment of any stamp duty that may have been saved should the chattels price have been included in the purchase price paid for the property. Please remember that the value the revenue will agree to an item is based on second hand value. If you were in any doubt about the question of valuation we would urge you to ask the Inland Revenue for guidance – you will appreciate your conveyancer is not able to make any judgements or give an expert opinion about the test of whether any apportionment on price is reasonable. You conveyancer may ask that a proposed apportionment be reviewed either by a valuer of by the Inland Revenue where we have cause for concern about the legitimacy of such a proposal. The reason is, that conveyancing lawyers are expected to exercise diligence in relation to these matters.
It should come as no surprise that it is a criminal offence to deliberately deceive or seek to deceive the Inland Revenue and such activities may be construed by the Inland Revenue as fraudulent. If you wish to pay substantial sums in respect of chattels you should note the Inland Revenue’s views on what is an acceptable chattel for the purposes of stamp duty land tax, and this does not include any items of fixed nature at the property such as fitted oven, built in wardrobes or oven/hob, or potentially removable outbuildings.
You should also be aware that the Estate Agents’ particulars/Memorandum of sale do not form part of the Contract and cannot be relied upon on a legal basis ( there are normally caveats on the sales memo to this effect ).
It is therefore very important that your conveyancing solicitor or conveyancing lawyer if the Fittings and Contents List is incorrect in any way. Which ever conveyancing firm you decide to instruct, they are unlikely to accept responsibility for the seller of the property failing to leave agreed items at the property following completion as they have no control over such matters.
Another important practical concern relates to the buyers mortgage loan. Lenders will only value the bricks and mortar, therefore if the buyer in this example was seeking to obtain £121000 on mortgage, the lender will need to be aware of the apportionment of £1000, and invariably will lend only £120, 000. If there is any doubt we recommend that the parties seek guidance from the lender or their valuer.