What are fixtures and chattels in the property buying process?

You may hear about fixtures and chattels when you buy a property. But what are they and why do they matter? Let’s find out more.

We’re all looking for ways to save money at the moment, particularly with the cost of living crisis and higher interest rates than we’re generally used to. One method that many property buyers are talking about is allocating a portion of the agreed prices as payment for chattels, which can reduce your Stamp Duty Land Tax (SDLT) bill.

In this article, we’ll look deeper at chattels and a similar term called ‘fixtures’. We’ll also look at why you should be cautious if you’re considering involving chattels in your property purchase. Let’s get started.

Fixtures

A fixture is an item that isn’t the land, bricks or mortar of a property, but could be considered part of the property itself as it’s too hard to remove without causing damage. For example, fitted kitchens, baths, central heating systems and burglar alarms are usually considered fixtures. If they’re integrated, you would also consider white goods like washing machines and dishwashers as fixtures.

In a property purchase, fixtures are considered part of the land. As a result, payment for fixtures is subject to SDLT. 

Chattels

Chattels, on the other hand, are items that are not considered part of the land because they can be removed without damaging the property. Typical examples of chattels include curtains, blinds, sofas and unintegrated white goods. 

Because chattels are separate from the property, they are not considered when you calculate your SDLT liability.

Paying for chattels

Because chattels are not taxable with SDLT, some buyers and sellers may come to an agreement where the buyer pays a significantly larger sum for the chattels, which is then deducted from the purchase price. 

While this may seem tempting, it’s not a good course of action. HMRC states that you can only deduct a fair value for chattels from the agreed property price. It’s certainly possible that HMRC may choose to investigate your purchase as part of its routine enquiries. If you’re judged to have broken the rules and overvalued your chattels, you could face criminal sanctions for fraud. What’s more, it could break your contract with the seller and invalidate your property purchase.

Getting it right

When you involve fixtures and chattels in your property purchase, you and the seller must agree on a detailed list. The best practice is detailing a typical price for each individual chattel on the open market, such as the price of a second-hand sofa. If necessary, you could involve a qualified professional to value your chattels.

Another great course of action is to involve an expert property law solicitor. They’ll advise you on the right way to proceed so you can minimise your Stamp Duty Land Tax liability without breaking the law.

Find out more from Couchman Hanson

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Call 01428 774756 or visit couchmanhanson.co.uk