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It appears to the committee that there is significant confusion among practitioners about the circumstances in which certificates of waiver/exemption/discharge from the NPPR charge or the household charge must be obtained, and when it is appropriate to obtain a declaration from a vendor (or a purchaser in some cases) as to the non-applicability of the relevant piece of legislation. It appears to the committee that exemptions (from a charge or tax that would otherwise be due) are being confused with situations where the relevant act does not apply at all.

It is necessary to distinguish between:

1)      Situations where the relevant legislation makes statutory provision for a specific exemption or waiver and provides for the issue of a certificate in relation to same or where it provides for issue of a certificate of discharge following payment of the relevant charge or tax, and

2)      Situations where a property does not come within the ambit of the relevant legislation because, for example, it does not meet the definition of ‘residential property’ or ‘relevant residential property’ as set out in the different pieces of legislation (either because it is uninhabitable, is part of trading stock, and so on), in which case the relevant act does not apply and the property is not subject to the charge. This second situation is not an exemption situation and a certificate of exemption is not necessary and will not be issued.

The committee wishes to clarify that its practice note published in the June 2013 Gazette p50 relates to cases that come within the ambit of the relevant legislation and where the legislation provides for a waiver or exemption in certain circumstances or where the charge or tax is paid and there is statutory provision for issuing a receipt, that is, cases described in paragraph 1 above. The committee confirms that certificates of waiver/exemption/discharge should be obtained in those cases, as there is specific statutory provision for them and, if they are not obtained, a purchaser cannot be certain that a property is not subject to a charge for any unpaid NPPR or household charge. A declaration from a vendor as to entitlement to a waiver or exemption is not sufficient, and a receipt for payment by itself is not sufficient in these cases.

To deal with the situations described in paragraph 2 above, the committee’s first practice note on NPPR published in the September 2009 Gazette p44 recommended that a statutory declaration should be obtained if it is claimed that the charge does not apply. Although not repeated in subsequent practice notes, the committee understands that this has also become common practice in relation to cases where it is claimed that the household charge and the local property tax do not apply, and the committee recommends this extension of this practice.

The committee has set out in a table the circumstances in which the various certificates or declarations are appropriate.

This can also be accessed in the members’ area of the Society’s website by clicking on ‘Committees’, ‘Conveyancing Committee’, ‘Resources’ (in the box titled ‘Additional information’) and scrolling down to ‘Conveyancing guidelines’.