Sole proprietor joint mortgage-Deeds

db91

Hi all,
I'm helping a family member get onto the property ladder with a sole proprietor, joint mortgage.

My question, eventually we want to transfer the deeds so that both of our names are on it, do we have to wait until the initial 2 year mortgage is over? Or can we arrange to gift 50% of the house and get my name added to the deeds straight away and avoid SDLT?

Thank you

bucksbloke

If you are doing sole proprietor joint mortgage - your name will not be on Land Registry as an owner, and you'll be required to sign a deed of postponement - which gives the lender rights above your own. 

You will be taking on a promise to repay a debt which you do not own an asset for. If you are going to do this, get your own independent legal advice away from the family member you are doing this for. 

[Deleted User]

If you want on the deeds why don't you just do a normal joint mortgage now?

In 2 years time you would still have a sdlt liability when adding yourself to the title

db91

Deleted_User said:

If you want on the deeds why don't you just do a normal joint mortgage now?

In 2 years time you would still have a sdlt liability when adding yourself to the title

Hi Jma,

Thanks for the response. Would SDLT still be payable? I was reading the HMRC website and found the below.

Some land and property transactions do not need a SDLT return, including:

• transactions where no money or other payment changed hands

Thanks

SDLT_Geek

If you are putting in capital at the time of the purchase and will have an underlying share in the property, even though not on the title, then you are a "joint purchaser" for the purposes of SDLT.  If you already have a property then the extra 3% SDLT will apply straight away. 

JBSP mortgages only tend to work well for SDLT if you are "lending your good credit" to help a family member by being liable on a mortgage.  They do not work well where you are putting in capital and expect a share in the property.  There is an article about it here: https://www.blakemorgan.co.uk/joint-borrower-sole-proprietor-mortgages-and-living-together-agreements/

[Deleted User]

@SDLT_Geek if a jbsp mortgage is arranged on a 'lending their good credit' basis and later the joint mortgagor  asked a solicitor to add them to the deeds would this be flagged as being subject to stamp duty?  If no funds changed hands at any point and the joint mortgage clients didn't live together?

I'm not sure why they would do this though 

db91

Thanks for the responses.

Property transactions where no money or other type of payment changes hands

You can give property or land away or transfer ownership to another person. If there’s no ‘chargeable consideration’ you don’t have to pay SDLT or file a return. The chargeable consideration is a payment that can be cash or another type of payment, including:

• goods
• works or services
• release from a debt
• transfer of a debt, including the value of any outstanding mortgage

Regarding the bottom point, if we were to transfer 50% of the property to myself, this would mean paying SDLT on 50% of the outstanding amount on the mortgage yes? However, if we did a normal mortgage, I would have to pay SDLT on 100% of the property purchase price? 

Just trying to get a better understanding.

Thanks for your help again. 

[Deleted User]

db91 said:

• transfer of a debt, including the value of any outstanding mortgage

Regarding the bottom point, if we were to transfer 50% of the property to myself, this would mean paying SDLT on 50% of the outstanding amount on the mortgage yes? However, if we did a normal mortgage, I would have to pay SDLT on 100% of the property purchase price? 

Its an interesting question because if its already a joint mortgage then you already have 50% of the debt so there wouldnt be any further transfer.    
Hopefully someone with more knowledge can clarify although you may need to seek legal advice ultimately