Buying out Equity Loan - SDLT?

Robsym

Hi,

I live with my wife in a flat in North London.

When she bought the flat in 2004 she was working with the NHS so got help with an equity loan of 38.5% from Key Homebuy (Now Metropolitan).

The property is worth approx £190k and we have £37k left on the mortgage

We'd like to buy out the equity loan, so on the advise of Metropolitan we've arranged for a RICS approved valuation to be done on the flat. This will enable Metropolitan to come up with a figure for the buy-out.

We're planning to do this by arranging some extra borrowing on our current mortgage.

Does anyone know if we'd be subject to SDLT?

thanks:)

Rob and Lu

gazzabboi

It depends how much stamp duty you paid in the 1st place. For eg if you paid stamp duty on the full price eg £1900 on £190k, then you won't be required to pay any more as you staircase. If you bought a £130k share and only paid £1300, then you have to pay more when you buy equity, ie a further £600 on the £60k you are buying. Something like that.

http://www.hmrc.gov.uk/sdlt/calculate/shared-ownership.htm

kingstreet

It isn't shared ownership. It's shared equity.

As the property was purchased 100% at the outset, there is no stamp duty as all you are doing is paying off a loan.

If you paid off the mortgage, there would similarly be no stamp duty to pay as you are not actually buying anything. This is different to shared ownership where you would actually be buying a further share in the property.

Robsym

Thanks Gazzabboi and Kingstreet for the speedy replies!

We definately paid stamp duty on the full flats value so it sounds like SDLT shouldn't be required.

I appreciate the advice, cheers all:beer: