Joint Borrowers, Sole Proprietor Mortgages

JackMichael

Hello all! 

Hoping someone can offer help/advise or if anyone has been in the same situation that I’m currently in. 

I’m in a position where myself and my partner are looking to buy a house. I am a first time buyer, where he currently owns the apartment that we live in. 

Ideally, he would like to keep this property to rent and live in the house that we want to buy together. 

We’ve been told about and have been reading up on ‘joint borrowers, sole proprietor’ mortgages, where we can both get a mortgage together, but only I will go on the deeds, as the sole proprietor. 

In theory, this will enable me to have the first time buyer stamp duty relief? And won’t be charged the Higher Rate Stamp Duty, which we would incur if my partner was on the deeds and owned the house aswell? 

We’ve read that a lot of parents/grandparents do this for their children. I’m assuming they’re not charged a second home tax, as it’s only their child on the house deeds? 

We’re not a married a couple, and understand the complications that this could leave him in, if things went sour. 

Has anyone been in this situation or could anyone offer any information and light on this matter? 

Hope you can help, thanks. 

K_S

@JackMichael Until recently, I was under the same impression as yourself but from a recent case it's unfortunately it's not always that straightforward.

If your partner will have absolutely no beneficial interest in the property being purchased, he will not be treated as a joint purchaser of that dwelling so the SDLT should be based on your status. The solicitor would require written confirmation of this. So in this scenario he will be equally and jointly responsible for the mortgage with no rights at all to the property.

Any future entitlement to funds from the sale of the property, to income from the property or the right to occupy the property would mean that they do have a beneficial interest so may come into the picture for SDLT.

@SDLT_Geek is the resident expert on these matters, hopefully they will comment.

JackMichael

@K_S Thankyou for your response. 

You read articles, forums and get told varying information but can’t find anything for definite anywhere; so I appreciate your reply and hope that @SDLT_Geek can provide some more information for me! 🤞🏼

SDLT_Geek

JackMichael said:

Hello all! 

Hoping someone can offer help/advise or if anyone has been in the same situation that I’m currently in. 

I’m in a position where myself and my partner are looking to buy a house. I am a first time buyer, where he currently owns the apartment that we live in. 

Ideally, he would like to keep this property to rent and live in the house that we want to buy together. 

We’ve been told about and have been reading up on ‘joint borrowers, sole proprietor’ mortgages, where we can both get a mortgage together, but only I will go on the deeds, as the sole proprietor. 

In theory, this will enable me to have the first time buyer stamp duty relief? And won’t be charged the Higher Rate Stamp Duty, which we would incur if my partner was on the deeds and owned the house aswell? 

We’ve read that a lot of parents/grandparents do this for their children. I’m assuming they’re not charged a second home tax, as it’s only their child on the house deeds? 

We’re not a married a couple, and understand the complications that this could leave him in, if things went sour. 

Has anyone been in this situation or could anyone offer any information and light on this matter? 

Hope you can help, thanks. 

I agree with the comments by @K_S This type of JBSP mortgage is unlikely to help if your partner is putting in any capital.

This article https://www.blakemorgan.co.uk/bank-of-mum-and-dad-helping-child-who-also-will-have-a-commercial-mortgage/ explains how it can work well for parents supporting their offspring.  This piece https://www.taxadvisermagazine.com/article/additional-properties explains why it does not always work so well for couples.

JackMichael

@SDLT_Geek thanks for your quick response and the articles you’ve sent, I’ll give them a read. 

Regarding the comment you made about Capital, for example, if my partner were to help me with the deposit of the down payment for the JBSP mortgage, they would regard this as them having an ‘interest’ in the property and therefore class it as him having a second home and therefore still required to pay the higher/second home stamp duty? 

Thanks again for your help! 

SDLT_Geek

I cannot see a JBSP mortgage having the desired effect if your partner is funding part of the deposit.