Avoiding +3% Stamp Duty

jandk163

Hi all,

(Sorry if this thread already exists - I am new to MSE forums today).

Summary of my circumstances:

I currently own my own house (partner lives with me, but not on mortgage or deeds)
My partner owns another place with a friend, which their friend lives in (on mortgage, and deeds, but actually doesn't contribute to mortgage as friend lives there alone)
I have an offer accepted on new house, which I plan to add partner to my mortgage (porting existing one as another 2 years to go) and for the new house we need our combined finances to afford new place (i.e. I can't go alone to avoid SD)

Barrier:

The new Stamp Duty 1st April 2016 suggests +3% increase if anyone has any other property, which my partner technically has (see above)

Question:

Obviously the finer details will be announced on the 16th March, but in the meantime, bearing in mind I am still waiting for my existing mortgage company to underwrite my offer (long list due to the new Stamp Duty rules), but I wondered in the meantime whether there was anything my partner and I could do to avoid the increase in Stamp Duty fees?

Things to Consider:

They don't rent their house out, they moved out 6+ years ago but becasue their firend couldn't afford to take on the mortgage (officially alone), they remained on it.

They haven't had another property to officially name as their 'main residence'.

They have lived with me, paying rent, council tax and also on the electoral register since April 2015.

Footnote:

I have an existing mortgage (tied into a lender for 2+ years) and with only 3 weeks to go with the new Stamp Duty rules, fear it is too late notice to buy myself out of the existing mortgage to find a new provider. (I have enquired private surveys to speed up the process, and also switching for a faster mortgage offer - none viable)

Our house sale and purchase offers were all accepted well over 4 weeks ago, (sale was accepted 8 weeks ago) but due to the long waiting list for my mortgage company, I simply couldn't speed up the process - I have tried! (see above)

I am using e-Zie conveyancing who are fully aware we are trying to move before 31st March!

Any ideas / adivce / feedback would be much appreciated!

KB

booksurr

your partner does not technically own a house, he actually owns a house

as he needs to come in with you so you can both afford the new property he will own 2 houses

until finer details are announced there is no way around that, he (and you) will be hit for the 3% when you buy the new house as long as he is named on it

davidmcn

Nope. Most likely options appear to be :

1. Complete purchase before the deadline (seems unlikely)
2. Partner gets rid of his other property (but I presume his friend still can't afford to buy him out? Can someone else take over? Neither's going to be quick.)

G_M

partner should sell their share in their property to their friend before 1/4/16

(sorry, before your joint purchase)

jandk163

Thank you! Feared the tecnicality would bite us...sad thing is, they don't pay the mortgage and haven't done so for 6+ years) and also haven't iived there for the same length of time! They also don't benefit from their friend who is slowly paying off the mortgage.

Is it worth exploring them being taken off the deeds (with a separate ownership document being written by solicitors) or just kissing goodbye to the unplanned £9k?

I only ask, as in our eyes they are not 'technically' living there and have'nt done for 6 years (and more importantly don't benefit from the 'buy to let' this new scheme is aiming to avoid)

Thanks once again for any insight

(Will keep close eye on the announcement 16th March)

jandk163

Thank you - very helpful!

KB

davidmcn

kbutler321 wrote: »

Is it worth exploring them being taken off the deeds (with a separate ownership document being written by solicitors) or just kissing goodbye to the unplanned £9k?

Can their friend now afford to take on the mortgage in their sole name?

(incidentally, did your partner declare their liability for this other mortgage when you made your application for your new one?)

jandk163

Hi, thank you!

Sadly their friend can't afford to take on their share or buy them out.

They pay the full mortgage as its cheaper than private rent, but won't get signed off by mortgage company to go alone as they don't earn enough!

My partner is also concerned if they let their share go, they will lose out when the finally sell as the friend will be sole owner (mortgage and deeds).

KB

G_M

Your friend clearly wants his cake. To eat, to sell and to keep!

He wants to

* remain owner of his property, to benefit from increasing value over time, and

* wants to co -own the new property he plans to live in with you, but also

* wants to benefit from only owning one property, so as to avoid tax.

Eyes too big for his mouth.....

jandk163

Yes we did! Did we not need to? They are still officially on the mortgage and deed (which credit ratings and searhces would've identified) even though they don't pay mortgage or live there!

jandk163

No this is my doing, not theirs! I was asked to move jobs to an area which is too far to commute, which forced me to move and as they live with me, they too have to move (note they are in the foces so don't have a restricted location).

They are not in a position to sell theirs unless they want to leave their friend high-and-dry, which any decent friend wouldn't do!

It is just we fall in the grey band of those affected by new stamp duty, as we are not buying to benefit from buy to let (as we dont have one - their friend is living in the house, but my partner receives no rent / benefit, but cannot be removed from mortgage without putting their friend in a difficult position) nor are we rich enough to have a 2nd home! So we don't feel we are one of those that the Government are trying to penalise!

So while I thank you for your reply, please consider some peoples real barriers. I am a genuine person trying to find ways around the stamp duty which I will be penalised for (when if you consider our situaton, neither myself or my partner benefit from as we don't see a penny from the other property, nor does it part their bank account).

Regards,

KB