SDLT Deed of Trust

j45p41

I have a bit of an odd situation. I am trying to move my parents over to live near me as they are getting older and need care. The house they live in is owned by me and it is not selling. So i am trying to get a BTL on the new house. Unfortunately I also helped my brother get a mortgage a few years ago and the idea was that after he got married he would take me off the mortgage. He jas been really lazy and irresponsible and not done this. My mortgage advisor says that i could get a mortgage on his name and draw up a deed of trust. However given that I will be putting up the money anyway I will be paying the higher rate of SDLT when for the initial purchase and dont want to pay it again when i transfer the mortgage in my name in a couple of years by which time my parents' current home would have been sold.

I have looked at the hmrc website and it says:

'
If the larger share is given outright as a gift
If you take a bigger share but don’t pay anything in return, there’s no ‘consideration’ given including taking on liability for a mortgage. You won’t pay SDLT, even if the value of the extra part of the share is more than the SDLT threshold. You don’t need to tell HMRC about the transaction.
'

Its been a long day but when i read the other examples i th ink that I would have to pay sdlt but this extract seems to indicate the opposite.

If anybody knows what the answer is then i would really appreciate some assistance.

The other option that is going through my head is that i could just say to my brother that we keep stakes in each property and dont worry about it until it comes to selling....

Thanks to the kind responder in advance!

:beer:

SDLT_Geek

The text you refer to is from this: https://www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property It is about physically dividing up a jointly owned prperty between the joint owners, so is not relevant to your situation.

j45p41

Wow thank you so much ! does that mean that if we draw a deed of trust we will only have to pay sdltone?

:money:
:money:
:rotfl:

SDLT_Geek

I wonder if you have a stake in your brother's property? Just because you are liable on his mortgage does not give you a share in his property. Is there a declaration of trust? Does that make it clear that he is the sole beneficial owner? Perhaps there is a sole proprietor / joint borrower mortgage so that you are jointly liable for "his" loan?

So is the idea now the mirror of that? The new property will be entirely yours beneficially, but your brother will be liable on the mortgage too. A declaration of trust would confirm your ownership.

That way you pay SDLT once when you buy it (higher rates I expect), but there will be no need later for you to acquire a share from your brother as you will have full ownership from the start.

j45p41

Hi so when we bought his property it was on a joint application. There was no declaration of any proportions so we assumed we owned the house 50/50. I did it because he is my litte brother and I wanted to get him on the property ladder and his income alone would not have allowed the purchase. We lived with him for three years and then he got married, we moved out, and his wife started to pay my half of the mortgage but my name stayed on the title and mortgage. No there was no specific agreement with the lender that he was the sole owner.

So verbally there was a contract that I would not want anything from him when he sold the property. We we told to get the deed of trust written by a solicitor, he would present it to his mortgage company and get his wife to take my part of the mortgage and that would be the end of it.

Now the fact that he has not acted on it means that even if he decides to pull his finger out it will be too late and the house we want will go.

He has agreed to secure the mortgage with his wife for the new property. I will pay the deposit and repayments.

It would not be a direct mirror as now it will be him and his wife being liable for the mortgage and I would be the owner through the deed of trust. I will also get the deed of trust written up straight away.

I guess the concern was about having to pay sdlt twice once on his/his wife’s purchase through the mortgage and then on the execution of the deed of trust at which point I would get my own mortgage and remove their liability- which you have kindly clarified that we don’t have to by making the distinction between liability for the mortgage (through the mortgage application) and ownership (through the deed of trust).