Moving Home as a Couple

davem399

Hi All,

I'm looking for some advice on what to do with regards to moving home with my partner - apologies if this isn't the right place to be posting!

My partner and I both have our own properties. We live in her house, which she is technically mortgage-free on, but has an informal arrangement to pay her parents back on a monthly basis for. Her house is worth somewhere between £130-£150k. I have a flat, with a value of about £180k and a remaining mortgage of ~£85k, which I am currently letting out for a value a couple of hundred quid more than required for fixed outgoings (mortgage, ground rent, service charge etc).

We're wanting to move home next year, as we have a baby on the way, and our current home isn't in the most ideal location by any means. We're also looking to upsize, aiming for a property worth between £250-£280k.

We're definitely going to be selling my partners' house, and use that equity as a deposit on the new place. The dilemna comes in deciding whether to sell my flat and port my mortgage over to cover the new house, or to keep my flat and take out a new joint mortgage to cover the new house instead.

Financially, I think the monthly costs would be roughly the same either way, as we'd be losing out on the rental income from my flat if we were to sell it, and we'd have an extra mortgage to pay if we were to keep it. There's also the issue of the extra stamp duty on the new place, but in theory, this is a sunk cost, which would be slowly recovered over time through the letting of the flat (as well as paying off capital on a second property).

Any advice on what to do here would be much appreciated!

GoingOn30

Does your partner plan on paying her parents back what she owes them on her first property from the proceeds of the sale?
How much equity would that leave her with?
Are your incomes high enough to support 2 mortgages and allow you to keep the property you let out?

davem399

GoingOn30 wrote: »

Does your partner plan on paying her parents back what she owes them on her first property from the proceeds of the sale?
How much equity would that leave her with?

Not necessarily, no. If it's a decision on buying a new place or paying them back in lump, both us and they would prefer the former

GoingOn30 wrote: »

Are your incomes high enough to support 2 mortgages and allow you to keep the property you let out?

Reasonably enough - our combined incomes and the rent from the flat equate to about 3x what the combined mortgage cost would be. We'll be about £500-£600 worse off a month regardless of which option we go for, but it's worth it for a bigger place!

SDLT_Geek

davem399 wrote: »

There's also the issue of the extra stamp duty on the new place, but in theory, this is a sunk cost, which would be slowly recovered over time through the letting of the flat (as well as paying off capital on a second property)

You do not say if you are married, or will be by the time your partner's property is sold. If you are married by then I would not expect the higher rates of SDLT to be due, but just the usual rates of SDLT.

davem399

SDLT_Geek wrote: »

You do not say if you are married, or will be by the time your partner's property is sold. If you are married by then I would not expect the higher rates of SDLT to be due, but just the usual rates of SDLT.

We're not married, no, and we're unlikely to be by the time we wish to sell the house. Does being married give an exemption if one partner already has a property in their name?

SDLT_Geek

davem399 wrote: »

We're not married, no, and we're unlikely to be by the time we wish to sell the house. Does being married give an exemption if one partner already has a property in their name?

It can do if both parties have lived in the property being sold as their only or main residence. All of the usual conditions of the replacement exception need to be met. See some details here: https://www.zoopla.co.uk/discover/buying/stamp-duty-land-tax-3-surcharge-replacement-of-an-only-or-main-residence-and-the-all-important-three-year-rule/

There is some guidance in the Manual on the replacement exception, but it is not very clear and HMRC are presently working on it. I might get an update from them on it tomorrow. https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800 and https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09805.


Example 1 here https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09810 is pretty much bang on point.