Inter-family sale - queries

ABBF08291

Dear forum,

I currently live with my parents and 1 younger sibling in London (parents own this property; current value 800k; their outstanding mortgage 240k).
My parents are now retiring and will formally move back to the North of England into our original family home (they also own this property).

My parents are currently looking at completing a family sale in which myself and my fiance will purchase the London property from them via an inter-family sale transaction. We will then formally live in the property together as our residence. My fiance and I are able to raise approx. £475k via mortgage, and the £325k deposit 'required' shall be gifted to us as part of the sale with our LTV being approx. 60% (FYI the property value is £800k however the purchase price shall be set at £500k, ie the amount of cash my parents wish to receive from this sale).

I am in the middle of discussions with a couple of financial advisors and mortgage brokers who are helping to arrange this, but also wish to seek the views of the MSE community as I have a couple of queries with the above proposal:

Q: would stamp duty be payable on the purchase price of £500k or the valuation of £800k? I have been told conflitcing answers

Q: given this is an interfamily sale, do my fiance and I have to be legally married before completing? Our wedding is scheduled for 2017 however we hoped to complete the sale in 2016. We can however complete legal marriage proceedings in 2016 if necessary.

Q: how will my younger sibling be impacted in this sale? he has always lived in the property and intends to do so. however I understand some mortgage companies have reservations. If needed he can formally move out, however is there a way around this? such as including him on the mortgage application?

Many thanks for your input into the above.

kingstreet

£500k

No

Consent to mortgage form

The professionals you have contracted should be able to answer these in the same time as it took me, 5 seconds.

ABBF08291

Thank you kingstreet.

You would think so, but some people seem to enjoy trying to suggest otherwise. I more or less know these answers myself, confirmed by what you and most others say. But some people think otherwise.

One person told me that most lenders would reject my brother's consent to mortgage on the grounds my younger sibling has lived in the property all his life and could therefore in extreme circumstances argue he has an interest in the property regardless of any consent forms.

The same person told me that while most traditional mortgages do not require partners to be married, in an inter family trasnaction someone who is not your spouse isnt strictly family and therefore lenders are put off by the fact that this could pose problems later down the line in the event of a break up and lenders prefer legal married couples

Another person told me that stamp duty would be decided at the time because as my parents would be selling well below market value it could be seen as a way to avoid stamp duty etc.

thanks for your input.

kingstreet

Although he has lived in the property he did not do so as an owner, so no issue there.

If there was no purchaser directly blood related to the "donor," yes; not being married would be an issue but as one of you is, there's no issue.

SDLT is based on consideration, ie the actual money changing hands, not the notional value. However, CGT is based on true market value, so if this wasn't their PPR, the CGT liability would be based on the headline valuation, not the discounted price.