Conveyancing: Fixtures and Fittings
There may sometimes be disagreement between the buyer and seller about the fixtures and fittings of a property. This can be problematic as fixtures are usually considered to be included in the sale price whereas fittings may be excluded.
What are Fixtures and What are Fittings?Many buyers will have been influenced by interior decoration - carefully prepared to maximise a property’s appeal – when they decide to make an offer. However, we have all heard stories about excited new homeowners moving in to find that the property’s previous owner has removed light bulbs, carpets and perhaps even the kitchen sink.
In the broadest of terms a fixture is something which is attached or fixed to the property and a fitting is something constituting the contents of the property. However, this is not a clear cut area of law and there have been many court cases where senior judges have had to decide whether an item is a fixture or a fitting.
The cases suggest that a relevant consideration is how firmly an item is attached to a property. Items such as the components of a fitted bathroom have been held to be fixtures whereas as fitted carpets have been deemed to be fittings. Plants in the ground may be fixtures whereas plants in pots may be fittings. Fitted kitchen cupboards might be fixtures but kitchen appliances might be fittings. Very little is set in stone – but if it is, it is probably a fixture.
Fixtures and Fittings in the Sale ContractReaching an agreement on what are fixtures - and therefore included in the sale price - can be an important part of the conveyancing process. An agreed list of fixtures should be included in the contract that the parties exchange prior to completing the sale.
The National Conveyancing Protocol provides for a standard form which can be completed by the seller – making clear to the buyer what is included in the sale price. Perhaps slightly confusingly, the form is called the “Fittings and Contents” form. The form is divided into sections representing all aspects of a standard property, both inside and out. The seller can use this to show what is or is not included in the sale price.
If a buyer wants something to be included in the sale they can then enter into negotiations with the seller. It may not be possible to agree on every item but this should at least reduce the likelihood of nasty shocks on moving day. If a seller removes something that they had said was included in the sale the buyer may then have grounds for a legal claim against the seller for any loss or damage caused.
Stamp Duty and Fixtures and FittingsFor most residential property sales Stamp Duty – or Stamp Duty Land Tax – will be payable by the purchaser. Subject to certain exemptions, Stamp Duty is often calculated as a percentage of the property’s sale price. Current Stamp Duty payment bands are as follows:
- Nothing is payable for residential properties costing up to £125,000;
- 1% is payable for properties costing over £125,000 but less than £250,000 (unless the purchaser is a “first-time buyer” as defined for Stamp Duty purposes in which case they will be exempt);
- 3% for properties over £250,000 but less than £500,000; and,
- 4% for properties over £500,000.
In strict terms Stamp Duty is payable only on the price paid for the property itself. In most cases this will include fixtures which form part of the property. However, if an additional sum is being paid towards an item or items – or “chattels” - which do not form part of the structure of the property and which the vendor has agreed to leave behind, it is possible that this can be subtracted from the total figure used to calculate Stamp Duty. For some sales this could have the effect of reducing the rate at which Stamp Duty must be paid.
Working out whether part of the sale price may be excluded can be quite complicated. Failure to get it right could result in a tax fraud being committed, therefore it is vital not to reduce the price incorrectly. The website of HM Revenue & Customs offers further guidance on this point. If the buyer has obtained a mortgage for a higher amount than the sum declared for Stamp Duty the mortgage lender should be informed that this reduction has been made.