Buying Joint Property with Parents

Notloba

Hi,

I could do with a little advice regarding the best way to go about buying a property. We have found our ideal property which consists of a house with a linked bungalow. They are linked by a corridor which we would be looking at removing to make them two detached properties. The idea is that me and my partner would have the house and my parents would have the bungalow.

The issue is the two properties are currently being used as a single house with a single property title so I'm not sure what the best approach is to purchase the property in relation to stamp duty and our mortgage.

Currently, both my parents and ourselves have our property on the market with some good interest. My parents have a very interested cash buyer that they are hoping will offer this week. We have an offer but they would need to sell their property first to buy it. My parents have also sold another property and (one theirs sells) would have the cash to purchase the property we are looking to buy outright.

For simplification, the property we're looking at costs £800k, my parents would sell theirs for £500k and have £300k cash and we would sell ours for £400k.

So the predicament - if we sell our property, then we would need to transfer the £150k left on our mortgage to the new property. How would this work considering the property we are after only has a single title deed - would it need splitting in to 2 deeds upon purchase? I'm also guessing this would class as a "linked sale" in terms of stamp duty?

Alternatively, if my parents sells first (which appears likely) and they bought the entire property, we would then want to move in and pay back half when ours sold (which they are more than happy with). The only problem here is we would be paying stamp duty twice on the same property (or half of it anyway). We're not trying to avoid paying stamp duty, but surely there's a way to go about it without paying it twice? My parents would pay the stamp duty on £800k upon purchase but then we'd have to pay it on £400k if we were to "buy" half the property off them when ours sold. Could my parents "loan" us £400k and we buy half the property and then we pay back the loan once ours sold? What would be the best way?

Thanks for reading and any assistance would be greatly appreciated.

Comms69

Parents buy the full property, one of each of the couples on the deeds.


Get the necessary's done to split it.

Notloba

But how would that work in terms of porting our mortgage to the new property? Plus could you then get the discounted stamp duty for there being "2 properties" when there is only 1 title deed? Thanks again

Mojisola

Notloba wrote: »

We have found our ideal property which consists of a house with a linked bungalow. They are linked by a corridor which we would be looking at removing to make them two detached properties. The idea is that me and my partner would have the house and my parents would have the bungalow.

The issue is the two properties are currently being used as a single house with a single property title so I'm not sure what the best approach is to purchase the property in relation to stamp duty and our mortgage.

Will the council allow the change? Was the bungalow built with restrictions on the permission that they have to stay as one property?

Comms69

Notloba wrote: »

But how would that work in terms of porting our mortgage to the new property? Plus could you then get the discounted stamp duty for there being "2 properties" when there is only 1 title deed? Thanks again

Well once it's split you can mortgage it.


Or your parents can do a private charge on the property for the balance.

Tom99

Check the planning consent, also whether there is one or two Council Tax Bands.

lincroft1710

If the bungalow was built as a "granny annex", it is almost definite that the planning conditions will not allow the ownership to be split

Notloba

I don't think there's any concerns planning wise - the owner built a separate detached bungalow and then 10 year later decided to link them with an external corridor (It was never a granny annex - he used to rent it out). There used to be 2 properties but now it's 1 - with a single council tax payment.

lincroft1710

Notloba wrote: »

I don't think there's any concerns planning wise - the owner built a separate detached bungalow and then 10 year later decided to link them with an external corridor (It was never a granny annex - he used to rent it out). There used to be 2 properties but now it's 1 - with a single council tax payment.

It is still worth checking the planning consent for the bungalow, just to be certain

davidmcn

Notloba wrote: »

But how would that work in terms of porting our mortgage to the new property?

Do you want a mortgage, if there's enough cash for you/your parents not to require one? It's complicated from a mortgage lender's point of view until you split the title and only have you as the owners/borrowers. And as mentioned above, you need some more certainty about whether you can split the title.

Or you could have all four of you as owners of the whole lot, but lenders don't like more than one house in a title, and the age of your parents is likely to be a problem.

Slithery

Notloba wrote: »

I don't think there's any concerns planning wise - the owner built a separate detached bungalow and then 10 year later decided to link them with an external corridor (It was never a granny annex - he used to rent it out). There used to be 2 properties but now it's 1 - with a single council tax payment.

That's exactly the point. Will the council give you permission to convert it back into 2 separate properties?