Is VAT payable immediately on build-to-rent?

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NoRegretsCoyote

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More news of institutional landlords buying up developments to let.

I had read somewhere that no VAT is immediately payable by an institutional landlord who buys a development in order to let the units. Whereas a normal purchaser would pay 13.5%.

Is this correct?
 
No, I wouldn't agree with this. If a person, whether it be a fund, a company or an individual, buys new residential properties they will pay vat on the purchase price at time of purchase. As they will be renting the properties, which is an exempt activity, they will not be able to reclaim the vat charged on purchase.
 
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That's interesting.

So if an institutional landlord put them all for sale as individual units in future, VAT would have to be paid. Is that right?


I would think that this is a big factor in the recent examples of developers selling directly to institutional investors to let, rather than to the public.

The retail price would be about 12% lower excluding VAT, so probably room for the developer to boost margins a little. Also much less transaction costs.
 
@dublin67
I know property VAT is an extremely complex area, but I don't understand your post.

Developer A builds an apartment complex - entirely residential. On completion they sell the Fund B.
Are you saying that the Fund can buy without the VAT being paid upfront to developer as part of the transaction?
 
RedOnion said:
@dublin67
I know property VAT is an extremely complex area, but I don't understand your post.

Developer A builds an apartment complex - entirely residential. On completion they sell the Fund B.
Are you saying that the Fund can buy without the VAT being paid upfront to developer as part of the transaction?
Click to expand...
I read this entirely wrong and have amended it. To the best of my knowledge there are no specific vat rules relating to funds and therefore vat should apply when it buys the properties.
 
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