Staircasing : SDLT and Equity release

EllieL

Hi,

I have two separate queries in relation to our stair-casing situation, key details (estimates) are:

• We purchased a 35% Share in 2015 (full market value at the time £250,000, Share £87,500).
• Current Market Value is £290,000 (our share value £101,000)
• We would like to staircase to 100%
• our outstanding Mortgage is £77,000

My first Question is concerning Stamp Duty: What SDLT is due when we staircase to 100%, we have not yet paid any Stamp Duty as opted to do this in stages as we staircase. How is this calculated? I have received some detail from a solicitor but am not 100% sure it is correct based on what I have read on the .gov site but do not have a numeric brain!

My second Question is surrounding equity release: We will be remortaging in order to purchase additional shares. Our current share is worth aprox £101,000. Minus Outstanding Mortgage of £77,000 = £24,000 equity. Are we able to release any equity here - for example utilise £20,000 for a deposit on the new mortgage and then £4000 released. According to mortgage calculators we can borrow way over the required amount with a £20,000 deposit based on our income and a 95% LTV.


Thank you so much in advance for any guidance and help offered on either query!

getmore4less

145 is 50% of 290

EllieL

Hi 35% of £290,000 is £101,500.

The purchase price for the remaining 65% is £188,500

thank you
Ellie

00ec25

original purchase
87,500 paid for 35%
No SDLT due as consideration paid was <125,000

next (and final) share purchased cost 188,500
total paid to date 87.5 + 188.5 = 276,000
SDLT on final purchase (you have exceeded 80% ownership so triggered SDLT) is:
125,000 @ 0% = £0
250,000 - 125,000 = 125,000 @ 2% = 2,500
276,000 - 250,000 = 26,000 @ 5% = 1,300
total SDLT = 3,800

then adjust for apportionment 3,800 x 188,500/276,000 = £2,595

actual SDLT payable £2,595

read example 2
https://www.gov.uk/guidance/sdlt-shared-ownership-property

SDLT_Geek

Here is my SDLT calculation, assuming that you took the grant of a new lease in 2015 and elected not to pay SDLT on the whole market value then.

Total amount paid is £87,500 and £188,500 for two linked transactions. That is £276,000.

Because the lease was granted in 2015, after 12 March 2008, you do not have to revisit the 2015 return as a result of the staircasing.

You need to pay SDLT on the £188,500 now paid. To work this out you start by working out what the SDLT would be now on the total of £276,000. We use current rates of SDLT, so assuming that the higher rates of SDLT do not apply (this is your only property?) the SDLT on £276,000 would have been £3,800 (calculated in slices at 0% at 2% and at 5%).

You only pay a proportion of this £3,800 though. The proportion is £188,500 / £276,000. That works out as £2,595. [Edited to correct the proportion, I incorrectly used 65% before and stand corrected by 00ec25]

Does this match the calculation your solicitor carried out?

You will find some HMRC guidance here: https://www.gov.uk/guidance/sdlt-shared-ownership-property and also in the HMRC SDLT Manual.

EllieL

Thank you both for your replies, these figures are more like what we were expecting.

The solicitor has quoted £3,727.00. I am awaiting a response after querying this as some of the calculations they sent were not right.

I am also awaiting a response from a second solicitor (I was gaining quotes for legal fees) so it will be interesting what they come back with.