When buying or selling your property, you may hear your estate agent or the other side refer to ‘chattels’ and ‘fixtures’ – it is important to know the difference and how they will impact the transaction.
A ‘chattel’ is an asset (i.e. something that you own) that can be clearly identified and is moveable. An example would be a dining table – upon sale of your property you would be able to remove the table and transport it to your new home. A ‘fixture’ on the other hand is an asset that is installed in or fixed to the property, therefore becoming part of the building – for instance a washing machine becomes a fixture once it is installed and connected to the main water supply.
Chattels are exempt from the purchase price unless otherwise specified while fixtures are sold as part of the property and therefore need to be taken into account when making/considering offers. There have previously been legal disputes over which of the two categories certain items fall into, leading the courts to have devised tests to decide (basically falling into the categories of how and why is the item fixed). The bottom line is always to check whether items are included before making an offer.
In the majority of property transactions, there are items that the vendors will not wish to take with them to their new property. Often it suits both buyer and seller for furniture and other large items to stay in the property – it is the seller’s obligation to record all of the chattels ‘for sale’, as well as the fixtures that form part of the property, on the Fixtures, Fittings and Contents form. This will then be sent over to the purchaser’s lawyer.
Because stamp duty is only a tax payable on land (rather than personal property), identifying how much is being paid for chattels will have an impact on the amount of stamp duty due, particularly if the property price is close to a threshold (at £250,000 stamp duty jumps from 1% to 3% for example). If chattels are included in the final purchase price, they need to be fully listed on the fixtures, fittings and contents form at the open market value at the time – this means that the values must reflect the items’ second hand nature.
Artificially inflated prices for chattels or listing fixtures as such to bring down the property price can be treated by HMRC as tax evasion – it is generally best to err on the side of caution when deciding what proportion of the total can be attributed to purchase of chattels. If there are difficulties in assessing the value of particular items, it is worth employing a professional to value them so as to avoid difficulties if the HMRC raises enquiries post-completion.
By instructing a solicitor early, you can start compiling the list of items that you want to include in the sale of your property. Simply obtain an instant online conveyancing quote or give one of our advisors a ring on 0330 100 2322.