Stamp Duty question pertaining to Inherited house.

Eversham

Sorry, another Stamp Duty question, but I can't find anyone who's had advice about being in the same situation as myself. I'll break and down an simply as I can.
I'm 29 years old and married.

I have never owed or rented any house (being military) and neither has my wife

In April 2014 I inherited a 25% share in a mortgage free house currently valued at £200k

I'm now looking at buying my first house but have been told I'm not eligible for a 5% mortgage and I have to pay higher SD as I "technically" own a second home.

Now I've found a "loophole" which states
"The March 2016 Budget did give some reprieve to inherited properties, however. The Government confirmed that a small share (50% or less) in a single property which had been inherited within three years prior to buying another home (which would otherwise attract the 3% surcharge) will NOT be considered as an additional property."

Does this mean that I basically have until April 2017 to buy a house, I.e complete and exchange to be eligible for a 5% deposit mortgage and regular SD?

As this means the difference of needing £15k deposit or £30k for the same house!

Any help very much appreciated.

G_M

Where does it say you must buy before April 2017?

And it's not a 'loophole' - it's how the rules work.

Also not sure where the 5% mortgage comes in. If you have that much cash, why not forget the mortgage altogether, or increase the mortgage and get a nicer property?

Eversham

That's what I'm unsure about. Do those rules say that because I inherited the house in April 2014, I have 3 years/ 36 months from that date to buy a main residence?

Or does it relate to the property being inherited upto 3 years before the SD changes. That's what I'm confused about. "(50% or less) in a single property which had been inherited within three years prior to buying another home"

With regards to the deposit I'm somewhere in the middle with roughly £22k saved. So in this instance, I can afford a 2/3 bed in my area, roughly £160/200k, area dependant, if the lower rates apply to me, but still priced out if they aren't.

kingstreet

There are lenders who will lend 95% (not 5%!) with a property in the background, subject to affordability.

Eversham

Sorry, edited to say 5% deposit mortgage. Not 5%! Oops.

AdrianC

Eversham wrote: »

I have never owed ... any house

In April 2014 I inherited a 25% share in a mortgage free house currently valued at £200k

So you've never owned any house - apart from the house you own...

Who lives in it? Is it rented out? What happens with any rental income from it, and any maintenance expenses for it?

I'm now looking at buying my first house but have been told I'm not eligible for a 5% mortgage and I have to pay higher SD as I "technically" own a second home.

There's no "technically" about it. You own a quarter of a house, £50k-worth.

Now I've found a "loophole" which states
"The March 2016 Budget did give some reprieve to inherited properties, however. The Government confirmed that a small share (50% or less) in a single property which had been inherited within three years prior to buying another home (which would otherwise attract the 3% surcharge) will NOT be considered as an additional property."

So there y'go, then.

Does this mean that I basically have until April 2017 to buy a house, I.e complete and exchange to be eligible for ... regular SD?

Yes, exactly that. Three years from April 2014 is April 2017.

Do not get confused between the SDLT you may or may not have to pay, and the Loan-to-Value of the mortgage you'll need to buy it.

Have you considered the other option - selling your quarter-share of the inherited property to your co-owners? That'll not only solve this problem completely, rather than leave you hanging on what's already a fairly tight timescale, but free your £50k to be used to purchase the house you'll actually live in?

G_M

Yes, sorry - I missed the 2014 date of your inheritance.

3 years from 2014 is 2017.

That gave you plenty of time to make i your primary residence, or sell it, or whatever. If nothig's changed after 3 years, then it is plainly a long-term property ownership so if you purchase another that will be a 2nd property subject to addtional SDLT.