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    • dollyxdimple
    • By dollyxdimple 28th Sep 16, 11:03 PM
    • 16Posts
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    dollyxdimple
    A2 Charge Mortgage and Stamp Duty (a bit complicated...)
    • #1
    • 28th Sep 16, 11:03 PM
    A2 Charge Mortgage and Stamp Duty (a bit complicated...) 28th Sep 16 at 11:03 PM
    Hi, this might be a bit complicated, so I'll try and keep it brief and would be so grateful for any advice.

    Currently my husband and I live together in a property that I own. I brought the property after we were married and had to get the mortgage in my single name because my husband was still on a mortgage with his ex wife (even though the court ordered her to 'use her best endevours' to remove him from it. She basically never applied for him to be taken off and we cannot force her to do so). So he is still on the mortgage and his name is still on the deeds.

    Also, she continually threatens to default on the joint mortgage they have together and we were concerned about my husband owning another property in case she did default and the bank tried to come after our property to get their money.

    So recently I phoned First Direct (who I have my current mortgage with) to see if I could borrow any more money on my own so we could maybe buy a bigger place and they asked why I was not applying for a joint mortgage with my husband. I explained all of the above. First Direct (the wonders that they are) explained to me that we could apply for an A2 Charge on their mortgages, whereby both my husband and I would be jointly responsible for the mortgage (so both our salaries are taken into account - hurrah) but only my name would be on the deeds (thereby the property would not actually belong to my husband - meaning SHE could have no claim on it or it could not be seen as an asset of my husbands if she defaults). Brilliant, all our woes are over. First Direct did a mortgage interview for us both as joint mortgagees (is that a word?) and have sent us a decision in principle with an amount that means we can now buy a bigger property (we are currently in a small 2 bed flat and would like to upgrade to a 2 bed house). So all is good and off we go looking at properties.......

    However, we have now discovered that stamp duty has gone up if the property purchased is a second home. The price of properties we are looking at would mean a jump from about £6,000 stamp duty to £16,000!!! Because this would technically be a 2nd home for my husband as he already 'owns' another property. I put the word 'owns' in inverted commas because it is in it's loosest term. He basically is on the mortgage for a property he cannot live in, cannot sell and cannot remove himself from. Sigh.

    But, and this is my question, if we did the A2 Charge mortgage with FD, whereby he would be on the mortgage but not on the deeds, would we still get hit with the higher rate of stamp duty as technically he would not own the new house we brought. He would be responsible for paying the mortgage but have no legal ownership rights to the property? (We are aware we need to see a solicitor to draw up a declaration of trust regarding this).

    Anyone have any clue where we stand with this? So sorry for long winded question, but finding it hard to find any solid info online as A2 charge mortgages are very rare and the higher rate of SD only came in recently so there doesn't seem to be any info out there at moment for this set of circumstances.

    Thanks in advance for any help or advice.
Page 1
    • booksurr
    • By booksurr 28th Sep 16, 11:45 PM
    • 3,109 Posts
    • 3,529 Thanks
    booksurr
    • #2
    • 28th Sep 16, 11:45 PM
    • #2
    • 28th Sep 16, 11:45 PM
    you would probably be best off getting proper advice from professionals...

    FWIW the higher rate SDLT treats married couples as a single "unit" and therefore if one of the couple already owns a property then the higher rate applies when "they" buy another property. There is a special rule that applies this even if the new purchase is in only one name and the other spouse is not an owner of the new property but does own a pre-existing separate property. The "unit" is then treated as now owning 2 properties so the higher rate applies

    Furthermore, you say he will not be a legal owner (on the deeds) but you then mention getting a declaration of trust. A DoT may (proper legal advice required!) establish him as a beneficial owner, even though he is not a legal owner. In that case you may indeed be exposed to the higher rate SDLT as you would be back to being a "unit" with him owning 2 properties anyway.

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509184/GuidanceNote_Final.pdf
    See para 3.38 re beneficial interests
    See para 3.42 - 3.45 for married couples special rules

    he would not own the new house we brought.
    Originally posted by dollyxdimple
    sorry cannot resist - Does he plan to bring it somewhere with him then ("brought"), as opposed to buying it ("bought")?
    Last edited by booksurr; 29-09-2016 at 12:39 AM.
    • dollyxdimple
    • By dollyxdimple 29th Sep 16, 1:39 AM
    • 16 Posts
    • 7 Thanks
    dollyxdimple
    • #3
    • 29th Sep 16, 1:39 AM
    • #3
    • 29th Sep 16, 1:39 AM

    sorry cannot resist - Does he plan to bring it somewhere with him then ("brought"), as opposed to buying it ("bought")?
    Originally posted by booksurr
    You got me there! I wouldn't of been able to resist either!! (Yes, I am messing with you) ) I am quite anal about that type of stuff as well. Tired eyes sometimes just cannot see.

    Thanks for your reply. This sucks so much. We are just trying to move on with our lives after his divorce and are getting stuffed every which way we turn. CSA, trying to buy a house, it seems to never end. God help the man that marries the wrong woman!

    I will read, with interest, the information on the link you sent me, (once again, thanks for taking the time to send that), and get some professional advice. But I'm pretty sure that you have got it right. I will have to figure out if our finances will hold up to the inflated rate of SD and if not, looks like we are stuck here until his youngest turns 20. Only another 10yrs to go. Sigh.
    • Pixie5740
    • By Pixie5740 29th Sep 16, 7:19 AM
    • 8,849 Posts
    • 11,856 Thanks
    Pixie5740
    • #4
    • 29th Sep 16, 7:19 AM
    • #4
    • 29th Sep 16, 7:19 AM
    Would it be worth speaking with a solicitor about forcing the sale of the property jointly owned with his ex-wife since she doesn't seem to be making any endeavour never mind her best endeavour?
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • dollyxdimple
    • By dollyxdimple 9th Oct 16, 10:19 PM
    • 16 Posts
    • 7 Thanks
    dollyxdimple
    • #5
    • 9th Oct 16, 10:19 PM
    • #5
    • 9th Oct 16, 10:19 PM
    Would it be worth speaking with a solicitor about forcing the sale of the property jointly owned with his ex-wife since she doesn't seem to be making any endeavour never mind her best endeavour?
    Originally posted by Pixie5740
    Kids involved! Age 14 and 10. Nuff said. x
    • G_M
    • By G_M 9th Oct 16, 11:17 PM
    • 37,032 Posts
    • 40,953 Thanks
    G_M
    • #6
    • 9th Oct 16, 11:17 PM
    • #6
    • 9th Oct 16, 11:17 PM
    You are married. HMRC consider you a single unit for SDLT purposes.

    One of you already owns a property. (no 'inverted commas' - he is (one of) the registered owner(s).

    So this would be a 2nd property even if only your name were on the Title.

    You have 2 options to avoid the 2nd property SDLT:

    1) get divorced. You would then be considered seperately and if his name were not on the deeds of your joint home, you would be considered as owning 1 property each.

    2) remove his name from the Title of his current property. Obviously the best solution and I'm amazed he has not pursued this, via the courts if necessary, long ago.
    Last edited by G_M; 09-10-2016 at 11:20 PM.
    • Slinky
    • By Slinky 10th Oct 16, 8:21 AM
    • 3,812 Posts
    • 13,829 Thanks
    Slinky
    • #7
    • 10th Oct 16, 8:21 AM
    • #7
    • 10th Oct 16, 8:21 AM
    I know nothing of these things, but seeing that a court has told her to do something which she has not, does that not put her 'in contempt of court'?
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