2 friends buying together - one a first time buyer, one not (Stamp Duty & Mortgages)

SandDollars

Hey there,

I wondered if anyone were able to offer some advice please?

Myself and a very good friend are looking at getting a residential property together.

He is a first time buyer and as such qualifies for 5% discounted rate of stamp duty.

I already own a house mortgage free which I have divided into 2 flats, both are rented out, as it stands today the property has not yet been divided into 1x freehold with 2x leaseholds. This property/properties has/have never been my primary residence. I work at sea and I am only in the country for 2 months of the year. I wish to get a mortgage with him as it works well for both of us - he can get on the property ladder and I have a place to come home to which is not empty or rented to strangers for most of the year. My primary residence is currently my Mothers (when not on the boat.)

I ran a quick SDLT calculation at tax.service.gov.uk/calculate-stamp-duty-land-tax on a £400,000 property, first selecting that it would not replace my main residence and the stamp duty came out as £22,000. I then re-ran it as replacing my main residence and it came out at £10,000.

My understanding at the moment is that if we were to get a joint mortgage then my status would mean that he would lose his first time buyer discount on SDLT? Is this correct?

Because my primary residence is currently my Mothers (and the boat), am I right in thinking that the purchase would therefore replace my main residence? The options available on the Gov SDLT webpage don't seem to fit my circumstances .... I am a first time buyer for a primary residence as the previous purchase was just for development and rental.

I know that there is the option of getting a "Joint borrower sole proprietor" mortgage, which would mean that my friend would get his first time buyer discounts - however leaves me with no part of the property on paper (aside from mortgage liability and any other personal agreements we have signed). Are there any other options?

Not the most straightforward of situations - at least for me to get my head around at the moment. Any help or advice would be greatly appreciated. I am not trying to dodge paying SDLT but I feel it wise to explore my options to minimise the cost (22%!?)

Thanks

davidmcn

You are only "replacing your main residence" if you are selling (or have recently sold) your previous main residence and are buying a new main residence. Otherwise, obviously, it would apply to anybody who was moving house!

Pixie5740

The Guide to the Higher Rate of SDLT covers your situation. A situation which appears on this forum on a daily basis.

SDLT_Geek

If you and your friend buy jointly then based on what you say the higher rates of stamp duty land tax would apply to the purchase. First time buyers' relief is not available for the purchase for two reasons:
(a) You are not a first time buyer as it seems you have previously acquired a residential property.
(b) The higher rates of SDLT apply to you. The statutory provisions say that first time buyers' relief is overridden by the higher rates of SDLT.

Tom99

Sounds like you will have to offer to pay the whole £22,000 stamp duty.