Shared Ownership: Stamp Duty Mind Melt!

Lilstu

Hey everyone!

I have been trying for sometime now to try and work out a stamp duty question. I don’t want a nasty surprise when I sell my house so hopefully you can help.

I bought a £340,000 (full market value) shared ownership property in March 2016. I initially bought a 40% share which was £136,000.

I elected to pay any SDLT due in stages. So at the time of the initial transaction, I paid £220 on the initial transaction.


I have staircased an additional two times - both in 2017.

Staircased from 40% to 60% - market value 350,000
Staircased from 60% to 75% - market value 350,000

I am looking to sell my home in the foreseeable future but I cannot work out how much stamp duty I will have to pay at the time of sale because I deferred it. I have had some people tell me nothing because I haven’t gone over 80%, I have Had someone else tell me it will be £4413, my mortgage broker has told me it will be £1875.

I am at a total loss as to what the figure would actually be. I even tried calling HMRC but they were about as useful as a chocolate teapot. Can anyone help solve this once and for all?

Stuart x

00ec25

Lilstu wrote: »

I am looking to sell my home in the foreseeable future but I cannot work out how much stamp duty I will have to pay at the time of sale.

unless you mean something different you will pay nothing

you pay SDLT when you purchase not when you sell


if you mean that before selling the property you intend to increase your ownership share, then you will only pay SDLT if and when your ownership share exceeds 80%. That means when you own 80.0001% or more

if that is your real question, then how much you would pay on that purchase depends on how much that share will cost you.

have you tried to read the official guide instead of listening to mortgage brokers whose purpose in life is to sell mortgages, not offer tax advice?
https://www.gov.uk/guidance/sdlt-shared-ownership-property

Lilstu

I found the government advice on the website pretty confusing to be honest.

I deferred paying all the stamp duty up front so I’m confused how by doing so. I would get away with not paying anything. Surely they ask me to pay the amount I have deferred at the time of sale?

00ec25

Lilstu wrote: »

I found the government advice on the website pretty confusing to be honest.

I deferred paying all the stand duty up front so I’m confused how by doing so. I would get away with not paying anything. Surely they ask me to pay the amount I have deferred at the time of sale?

read the guide until you understand it, there is no point me repeating what I've said if you can't follow it

that is how shared ownership SDLT works, it is explained in the second section "How to work out SDLT"

Lilstu

My conveyancer that I used for the staircasing who should be familiar with stamp duty told me it was the £4413 figure. He even broke down the explanation as to why it’s that.

I understand you are saying that because I haven’t gone over 80% so I don’t pay it but surely that’s unfair to the people that pay it up front? Surely everyone would do this?

00ec25

Lilstu wrote: »

He even broke down the explanation as to why it’s that

the answer is in the OFFICIAL GUIDE, not in a random reply from someone who may not be answering the question you are now asking or giving an explanation you obviously have not understood the context of

what do you not understand about:
"If you buy more shares in a property, called ‘staircasing’, until your share reaches more than 80%, you don’t pay any more SDLT or tell HMRC about the transactions in a SDLT return."

MiserlyMartin

Yes you owe nothing. Happy days

SDLT_Geek

One important point is whether your buyer is prepared to buy when you have staircased to only 70% and whether your landlord will let you sell on that basis. Most leases say that the landlord's consent is needed for assignment; they might want to nominate a person in housing need for you to sell to and to follow a procedure for obtaining a market value.

Often in practice there has to be a "back to back" staircasing to 100% and then a sale.

Lilstu

SDLT geek - Yes my property went in the market a couple of days ago. I have to give the housing association first refusal to try to sell it for 4 weeks (and they take a 2% commission). After 4 weeks I can sell it on the open market as a non shared ownership property and the housing association doesn’t get the commission but would get the 25% they are due back. The latter option being preferable because I can find an estate agent who would not charge 2% so it will actually save me money

SDLT_Geek

The option where you sell the property as non shared ownership with the housing association getting the remaining 25% is a back to back transaction. One part is that you staircase out the last 25% with the housing association; the other part is that you immediately sell the lease with the rent now reduced to a nominal amount.

So that involves you staircasing to over 80% and so an SDLT charge. If you give me an estimate of the present market value of your property I should then be able to work out what you will need to pay the housing association (25% of that) and from that estimate the SDLT bill you will face. It is not a pretty or simple calculation! Subsale relief (now called pre-completion transaction relief) is not available.

Lilstu

They haven’t mentioned anything about a need for me to go over the 80%? My apartment is literally on the market at the moment with them.

Part of the letter says:

“
If Hyde New Homes secure the purchaser there is a resale fee payable on completion of the sale, together with the Association’s legal fees (that are estimated to be around £300 + VAT). Please refer to your lease for the resale fee that is applicable to your property.

If Hyde New Homes do not find a purchaser we will contact you following the closing date to set out your options for marketing the property with local estate agents.”

But absolutely no mention of the SDLT. As I said, I’m currently at 75% so this explains my initial post on here as it all is pretty confusing lol