Gifted deposit from partner living in property?

cjf94

Hi, myself and my partner have recently had an offer accepted on a house. I will be buying this property in my name only as my partner already owns a buy to let property. I am a first time buyer so will not have to.pay any stamp duty on the property. I will be providing 75% of the deposit and my partner was going to provide 25% of the deposit. This will be classed as a gifted deposit and will not be a loan. My partner however will be living in the property so will have an interest in it. I have found that many lenders will not accept this gifted deposit due to the fact that my partner will be living in the property. My mortgage broker advised that NatWest would accept this gift but I have since checked their lending criteria and found that this is not the case. They require a signed letter stating that it is a gift and that they will have no interest in the property. Luckily I have enough in personal savings to cover the 25% my partner was going to add to the deposit however this money was being saved for another use. Is there a legal way my partner can give me the 25% back after the purchase and an agreement written up stating that she will be entitled to 25% of the sale proceeds (once mortgage is repaid) should something go wrong. Or is there any other way round it? This will only be required until we get married in a few years time. Any advice/information would be much appreciated. Many thanks!

AnotherJoe

How much is this property? If less than £160k a loophole might be for partner to buy a 25% stake in it after you've bought it.

davidmcn

cjf94 wrote: »

I have enough in personal savings to cover the 25% my partner was going to add to the deposit however this money was being saved for another use.

So do that and use your partner's money for the other thing?

cjf94

AnotherJoe How much is this property? If less than £160k a loophole might be for partner to buy a 25% stake in it after you've bought it./QUOTE]
Hi thanks for your reply. Unfortunately it is £280k so I guess this can't be done.

cjf94

davidmcn wrote: »

So do that and use your partner's money for the other thing?

Thanks for your reply, the point is we would like this to be 'our' home and my partner will be living in the property contributing to the bills so I want them to have a stake in the property. If they simply give me the 25% as cash with no legal agreement this won't be protected if anything goes wrong and we have to sell the house. The question is can we write up and sign some sort of a legal agreement that states the percentages we own of the deposit/money left once mortgage is repaid. Thanks again

AnotherJoe

You can sign any agreements you want but AIUI when you marry if there is a transfer of property then SDLT becomes due. So I would expect that is not a route to avoiding the extra tax.

davidmcn

If that's your priority then put it into joint names. Yes, you'll have tax to pay, but you can't have your cake and eat it. Or reduce the tax by selling the BTL property first.

Hannah_kr7

Get you solicitor to draw up a declaration of trust to be lodged with the land registry on completion. That’s what I’ve done with my fianc! providing some deposit but he won’t be on the mortgage.

SDLT_Geek

Hannah_kr7 wrote: »

Get you solicitor to draw up a declaration of trust to be lodged with the land registry on completion. That’s what I’ve done with my fianc! providing some deposit but he won’t be on the mortgage.

A declaration of trust stating from the start that the partner has a share in the property means that the two of you are "joint purchasers" for SDLT purposes. That is the case even if the property is registered in your sole name at the Land Registry.

Being joint purchasers in this case is likely to mean the extra 3% SDLT applies if your partner still owns the buy to let property.

But have you checked whether the replacement exception could apply to your partner? It might if in the last three years she has sold or otherwise disposed of a property she was living in. There is some information on the replacement exception 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/