2 Homeowners buying new property together - SDLT query

whereshollie

Hi everyone

I don't feel like this is a particularly uncommon scenario but I would appreciate your advice!

My partner and I have both owned separate flats for a couple of years and still live in them separately (they are in the same block... and yes that's how we met...). Ultimately we want to buy a house together but I am aware of the stamp duty surcharge which for us in London would be quite significant. I think there are a few options for us and would love you to check my assumptions below, and whether I've missed anything!

1. Partner moves into my flat now for a year or two until we buy a house. His flat is rented out in the meantime. Then when we buy the new house we sell my flat but keep his - I assume the rental income would be considered as income in addition to his salary so we would be able to borrow more towards the mortgage. I also assume we would pay the SDLT surcharge as it would technically be his second home?? (even if his main residence at point of purchase is my flat which we'd be selling??)

2. As above but instead of keeping partner's flat when we buy the new place, we'd sell it. The problem with this is that the likelihood of getting a good price for 2 identical flats in the same block at the same time is unlikely. We will probably make a loss anyway as we missed out on the SDLT relief for 1st time buyers and have been hit by brexit stagnation in property prices. My assumption in this scenario however is that we would avoid the SDLT surcharge.

3. As (1) but we try and sell my partner's flat within 3 years of moving into the new house, thereby getting a refund on the SDLT surcharge.

There are a couple of other ideas that I'm discounting for now, including buying the new house on my income alone (we could do this but obviously wouldn't be able to afford as much as we could on two incomes); and selling one flat now and the other later, but this isn't a step we want to take just yet.

Thoughts welcome!

Thanks

Hollie

SDLT_Geek

I agree with your SDLT analysis in your three scenarios.

A tweak for Scenarios 1 and 3 is that if your partner lives with you in your flat as his only or main residence and you are married /civil partners by the time you sell it, then he can rely on your sale to come within the replacement exception. Just occasionally marriage can be a good thing for SDLT!

whereshollie

Haha! Will bear it in mind.... thanks!

whereshollie

Sorry actually one more question - if he lived in my flat for 3 years before we bought somewhere new would that change anything with regards to the SDLT?

SDLT_Geek

whereshollie wrote: »

Sorry actually one more question - if he lived in my flat for 3 years before we bought somewhere new would that change anything with regards to the SDLT?

Yes, it makes a difference. If he sells his former home after your joint purchase, then the fact that he had not lived in it at any point in the three years leading up to the joint purchase means that his sale would not entitle you to a recovery of the 3% due on the joint purchase (even though he sells his old home within the three years after the joint purchase).