SDLT payable on TOE + BTL remortgage?

tttim

Two years ago, before George Osborne changed the SDLT regulations, my girlfriend and I decided to invest in a buy-to-let property as neither of us has a pension. We found a 3-bed property for £148,500, but finding a mortgage proved to be more difficult, because my girlfriend was between jobs at the time and we were both considered as “first-time” landlords. Eventually, we found a 75% LTV deal with BM Solutions, but they were only prepared to offer the mortgage to me; not to the both of us. Consequently, the purchase went ahead with the house and mortgage in my name and stamp duty of £1485 was paid in November 2014. Had the transaction taken place 4 weeks later, only £470 would have been payable.

Since then, we have run the property together as planned without any hitches. However, our (my) cheap fixed rate with BM Solutions expired at the end of September, so we thought we’d take the opportunity to pay off some of the outstanding loan and perform a transfer of equity into both of our names before remortgaging. We found a 60% LTV fixed-rate product offered by Principality with “free legal”, so we have not engaged a solicitor ourselves. JCP Solicitors (acting on behalf of Principality) are prepared to handle the transfer of equity as part of the remortgaging process for an additional fee.

JCP are now telling me that SDLT is payable on the ToE, but how can that be possible? My girlfriend is effectively being gifted a 50% share in property which I already own. No consideration will be paid. I realise that under SDLT rules she is considered to be a purchaser of 50% of the mortgage debt. And seeing as I already own the property, she is surely an individual purchaser, isn’t she? Furthermore, she owns no other share in any other property either here in the UK or abroad. She is effectively a first-time buyer. The house is not being sold and re-purchased; it is being remortgaged. We are not married, in a civil partnership or related in any way, although we do live together in my main residence which I own outright. Having read the guidance from HMRC, I don’t see why SDLT should be payable. Or am I wrong?

getmore4less

My girlfriend is effectively being gifted a 50% share in property which I already own. No consideration will be paid.

The consideration is taking on 1/2 the debt,

The only bit that is gifted is the free equity.

tttim

My mistake, I understand that. I should have worded the question differently. She is effectively being gifted a 20% share of the property and acquiring 50% of the mortgage debt.

Typhoon2000

Stamp duty will be payable on the 50% of the debt being taken on. No stamp duty payable on the 20% equity if it is being given as a gift with no money changing hands.
If there was no mortgage then there would not be any stamp duty payable for the transfer of equity, if it was a gift and no money was changing hands.

SavingSteve

If she is taking on half of the 111k mortgage that'd be under the sdlt threshold anyway. I'm with you on this, as I don't see how any sdlt is payable here.

getmore4less

Are the solicitors aware she does not have a first home?

tlc678910

Are the solicitors clear that you are not married. I believe that married couples are treated as one unit whoever owns the property, so if you were married they could consider her a property owner.
Tlc