Sometimes, when residential property is purchased, the buyer grants a proper liferent to a third party ("the liferenter"). This liferent is a right to enjoy the use and benefit of the property for the lifetime of the liferenter (or some other time period as set out in the deed which creates the liferent). On termination of the liferent, title will vest in another person known as the “fiar”.
Note: Proper liferents differ from "improper (or beneficial) liferents" which are created by Settlement Trusts (Liferent Trusts), whereby the liferenter enjoys the benefit of property by way of a trust. Further details on "improper (or beneficial) liferents" can be found in part LBTT10063 of the guidance.
For the purposes of determining whether the ADS is applicable, the LBTT(A)(S)A 2016 provides that the liferenter is treated as the owner of the dwelling ("deemed ownership"), and that both the granter of the liferent and the fiar are to be treated as not being the owner. This is the case irrespective of whether the fiar registers their title in the Land Register or not.
Example 56: Dwelling purchased with liferent, purchasers already own main residence
Example 57: Dwelling purchased under liferent, purchaser already owns two dwellings
Example 58: Liferenter purchases a dwelling