2(1)This paragraph applies where—U.K.
(a)a lease is granted—
(i)by a qualifying body, or
(ii)in pursuance of the preserved right to buy,
(b)the conditions in sub-paragraph (2) are met, and
(c)the purchaser elects for tax to be charged in accordance with this paragraph.
(2)The conditions are as follows—
(a)the lease must be of a dwelling;
(b)the lease must give the lessee or lessees exclusive use of the dwelling;
(c)the lease must provide for the lessee or lessees to acquire the reversion;
(d)the lease must be granted partly in consideration of rent and partly in consideration of a premium calculated by reference to—
(i)the market value of the dwelling, or
(ii)a sum calculated by reference to that value;
(e)the lease must contain a statement of—
(i)the market value of the dwelling, or
(ii)the sum calculated by reference to that value,
by reference to which the premium is calculated.
(3)An election for tax to be charged in accordance with this paragraph must be included in the land transaction return made in respect of the grant of the lease, or in an amendment of that return, and is irrevocable, so that the return may not be amended so as to withdraw the election.
(4)Where this paragraph applies the chargeable consideration for the grant of the lease shall be taken to be the amount stated in the lease in accordance with sub-paragraph (2)(e)(i) or (ii).
As to the tax treatment of the acquisition of the reversion in pursuance of the lease, see paragraph 3.
(5)Section 118 (meaning of “market value”) does not apply in relation to the reference in sub-paragraph (2)(e) above to the market value of the dwelling.