Additional 3% SDLT for parents not on title deed?

aroominyork

We cannot afford to gift it and she will repay in 5-10 years. Perhaps, keppedalling, we can now drop that discussion and allow others to continue advising on how we best manage the situation.

Keep_pedalling

aroominyork wrote: »

We cannot afford to gift it and she will repay in 5-10 years. Perhaps, keppedalling, we can now drop that discussion and allow others to continue advising on how we best manage the situation.

If you can't afford it then it is really rather foolish to fund your daughter living beyond her means.

Pixie5740

How best to manage the situation hinges on what the mortgage lender will accept. If you can go ahead with your plan have you decided who and how the additional £15k of SDLT will be paid.

aroominyork

Pixie5740 wrote: »

have you decided who and how the additional £15k of SDLT will be paid.

As my post at 7.27pm said, we are looking for an option that means 3% is not payable. If 3% were due on the full purchase price it would be a deal-breaker.

Thrugelmir

aroominyork wrote: »

That’s very helpful, booksurr. Under option a) would there be a declaration of trust? If so, could the trust allow for the interest to change over time, since our plan under the ‘rent’ model was to review rent every two years based on the market rental value of the property? Also, how would this model allow us to be repaid at 10% of the value of the property at the time of repayment of the loan?

Lender will want this money gifted i.e. without any reservation. More than likely you will need to sign a letter to such an effect. Lenders therefore won't allow you to a place a charge over the property to secure the money advanced.

davidmcn

aroominyork wrote: »

We cannot afford to gift it and she will repay in 5-10 years.

I don't really follow - you can wave goodbye to the money for an unknown period of up to a decade, but can't afford to gift it? The most flexible and cheapest method is to gift it, and to trust your daughter that if and when you need a similar amount of cash, she'll return the favour. Formalising it as a loan would still avoid the SDLT, but restrict her choice of lenders.

marliepanda

aroominyork wrote: »

As my post at 7.27pm said, we are looking for an option that means 3% is not payable. If 3% were due on the full purchase price it would be a deal-breaker.

Honestly on the face of it, it sounds like your daughter cannot afford the house she wants and you cannot afford to just give her it and neither of you can afford the extra stamp duty your ideas will incur.

So, all in all, neither of you can afford his house.

getmore4less

What do these 1/2 million places rent for?

generous gross yield of 5% your share on £50k around £200pm and you want to discount that and then there is the tax.

fare rate as the are paying maintenance will be a lot lower.

What about a family springboard by Barclays. might be able to squeeze a property into that.

1.75% interest the money is yours, no extra stamp duty issues.

tlc678910

Hi,
Does it worry you that your daughter has not passed the mortgage affordability criteria form the extra 50k (she might struggle to pay any extra). Coupled with you saying that you can only afford to lend this money if you receive an income from it - that sounds like you can't afford to lend it in this way (with risk of non payment attached).

Could be a recipe for misery and strained family relationships all round.

Tlc

AnotherJoe

aroominyork wrote: »

That’s very helpful, booksurr. Under option a) would there be a declaration of trust? If so, could the trust allow for the interest to change over time, since our plan under the ‘rent’ model was to review rent every two years based on the market rental value of the property? Also, how would this model allow us to be repaid at 10% of the value of the property at the time of repayment of the loan?

Once there is any rent or repayment over time of this sum, the whole thing is a non starter, as its effectively her getting two mortgages, one from a mortgage company, one from you.

Either you formally state its a gift, trust her and she pays this back privately, or its an open ended loan with no obligation to pay back until she sells the house or remortgages (and then the condition about repayment in line with value of house price appreciation can kick in if you want)

However, since you say you cannot afford to loan it to her without getting "rent" in return, I agree with other posters, neither of you can actually afford this.