Buying second home with first time buyer

William1692

Hi,

I have an interesting query regarding the second home stamp duty and was hoping someone on here could clarify the situation.

I already own a property that I would like to rent out and purchase a new property with my girlfriend (not married), a first time buyer. We have never lived together previously which according to 'primelocation', this is a factor.

A purchase price has been agreed and with us both on the property deeds, I would incur a stamp duty cost of c.£5k!

When arranging the conveyancing, I was informed that actually we could just put this in the first time buyers name and set up a deed of trust to ensure none of us were at a disadvantage. For example I would be responsible for half of the mortgage payments (legally), and own half the debt/equity after sale. This would prevent the second stamp duty charge.

Other solicitors disagreed and said you can't write an agreement to ensure guarantee of mortgage payments and not be on the property deed. It all sounded a bit dodgy so I just thought, I was happy to pay this initially, it'll be fine.

Primarily, I do not want anyone to be negatively affected. This is a pure 50:50 deposit and investment, it is just frustrating that by me helping her to get onto the ladder, I am penalised.

So today I was looking online at Zoopla and came across this Q&A.


Q. What if I already own a property, but I'm buying with someone who doesn’t?

A. Unfortunately even if just one of you already owns a home (whether you are living in it or not), when you go to buy another one together, the 3% Stamp Duty surcharge will apply.

However, so long as you are NOT married, you can get around this by putting the new home in the other person's name (ie, the one who does not already own). HMRC has now confirmed to us that this will NOT be regarded as tax avoidance.

One problem with putting a new home in just one person's name is satisfying the lender's affordability criteria. But Ray Boulger, senior technical director at mortgage broker John Charcol, said that some banks including Metro Bank and The Woowich allow two names on the mortgage agreement but just one name on the property deeds.

Is this feasible for my situation and above board? Would there be any negative issues for either of us if as well if I created a deed of trust to protect my equity investment? This according to Zoopla is not regarded as Tax avoidance.

Much appreciate the help everyone.

Thanks

Pixie5740

I'm confused, is this going to be your home or an investment? Will you be living in the property with your gf?

William1692

Hi, sorry for the confusion, I currently live in a property by myself and she is renting. We want to buy a place together and live in it, then I would rent out my existing property.

Cheers

marksoton

Oh for crying out loud just pay up!

Clutterfree

Or sell your existing property...

Pixie5740

If you get one of these mortgages which allows one person named on the mortgage but two on the deeds does that not mean that the one person named on the mortgage would have to pass affordability on their own? I don't know the answer to that, I'm just throwing it out there.

Garethr123

Just been through this myself. I have to pay £5500 stamp duty however if you sell your first property within 36 months, the stamp duty is refunded.

booksurr

your soliciutors are right to be dubious...
- SDLT is based on chargeable consideration
- consideration can be of money (cash paid) or money's worth

being exposed to mortgage debt is "money's worth" so a D of Trust that records you as being so exposed makes you liable for SDLT in my opinion