First Time Buyer!! YES or NO?

Grumpy_chap

Nickfirsttimebuyer said:

My father who lives in Greece owns a flat, however, he confirmed to me that my sister & I own 31% of this flat & he owns the rest. However, once he passes away the flat will belong to me & my sister 50-50. 

What is the reason for this flat (presumably your father's principal private residence) being owned 31% OP, 31% OP's Sister, 38% OP's Father?

Is that the correct reading of the percentages or should it be read as 31% owned jointly by the OP & OP's Sister?  That would make the split 15.5% OP, 15.5% OP's Sister, 69% OP's Father.

If it is related to the Greek equivalent of IHT (if there is any), then that would suggest the property value is higher and the OP's share being greater than the £40k indicated above more likely.

This part-property ownership would also affect the OP should there ever be a need to claim means-tested benefits and may be considered an asset in the event of OP relationship breakdown with a partner.

Schwarzwald

Nickfirsttimebuyer said:

@SDLT_Geek my father own the usufruct indeed & he is at the same time main owner of the flat of approx. 38% (waiting to confirm all these from my Greek accountant) & my sister & I own the 31% however after my father's death we will own 50%. How can I use this condition in that case then? I really appreciate your help!

Usufruct might qualify you as not owning a home for SDLT purposes. I would read up on it and conclude for yourself what your assessment it. If at all, i would only disclose this matter to your conveyancer very carefully, they dont have much upside from treating you as a first time buyer, even if the usufruct should in all likelihood quality you as such. 

Nickfirsttimebuyer

@SDLT_Geek the price of the flat im buying in London is 312,100.00 but I don't know the current price of the house in Greece. I just know how much we bought it 25 years ago. How can I get an estimate of its current price please? Do I need to ask a mechanical engineer or someone else for an estimation?
Nick Gianniotis 
Nikos

SDLT_Geek

Schwarzwald said:

Nickfirsttimebuyer said:

@SDLT_Geek my father own the usufruct indeed & he is at the same time main owner of the flat of approx. 38% (waiting to confirm all these from my Greek accountant) & my sister & I own the 31% however after my father's death we will own 50%. How can I use this condition in that case then? I really appreciate your help!

Usufruct might qualify you as not owning a home for SDLT purposes. I would read up on it and conclude for yourself what your assessment it. If at all, i would only disclose this matter to your conveyancer very carefully, they dont have much upside from treating you as a first time buyer, even if the usufruct should in all likelihood quality you as such. 

It is a mugs game (and a fraudster's game) not disclosing the full picture to one's own conveyancer.  There are risks of:

(a)  A mortgage offer being withdrawn after you have committed by exchange of contract.
(b)  Evasion of tax.

Yes, telling the truth means having to face up to the complications, but that is what an honest person would do.

SDLT_Geek

Nickfirsttimebuyer said:

@SDLT_Geek the price of the flat im buying in London is 312,100.00 but I don't know the current price of the house in Greece. I just know how much we bought it 25 years ago. How can I get an estimate of its current price please? Do I need to ask a mechanical engineer or someone else for an estimation?
Nick Gianniotis 
Nikos

Your father might have a reasonable idea of the value of the property he lives in, or know someone who can help him.  As you have a 31% share, what will matter is whether the value is now above or below £129,032.  If it is above or below that by some considerable margin, then that might be all you need to know for present purposes.  It the value is around the £129K mark, then more care will be needed.  A property valuer, or estate agent might be able to help. (Called a μεσιτικό γραφείο or mesitikó grafeío perhaps?)

Is the property really subject to a usufruct?  I would have thought that unlikely if you bought it together.  I thought a usufruct is more normally found where interests in property are passed down the generations.

It seems as if you need to speak to your father.  

If you bought the property together 25 years ago then it seems highly unlikely you qualify as a first time buyer for SDLT purposes.  That leaves the possible SDLT on a purchase for £312,000:

At standard rates: £3,100.
With the extra 3%: £12,460.

macman

How can you own 38% of a property and not be aware of it except by asking your father? At some point you must have signed some documentation confirming your part ownership, or does your father have some Greek version of POA for you?

Schwarzwald

SDLT_Geek said:

Schwarzwald said:

Nickfirsttimebuyer said:

@SDLT_Geek my father own the usufruct indeed & he is at the same time main owner of the flat of approx. 38% (waiting to confirm all these from my Greek accountant) & my sister & I own the 31% however after my father's death we will own 50%. How can I use this condition in that case then? I really appreciate your help!

Usufruct might qualify you as not owning a home for SDLT purposes. I would read up on it and conclude for yourself what your assessment it. If at all, i would only disclose this matter to your conveyancer very carefully, they dont have much upside from treating you as a first time buyer, even if the usufruct should in all likelihood quality you as such. 

It is a mugs game (and a fraudster's game) not disclosing the full picture to one's own conveyancer.  There are risks of:

(a)  A mortgage offer being withdrawn after you have committed by exchange of contract.
(b)  Evasion of tax.

Yes, telling the truth means having to face up to the complications, but that is what an honest person would do.

Fully agree with you.
an honest person discloses the matter to their solicitor.
a smart honest person first educates themself, then takes the next action.
conveyancing in the UK is a mass service and i would not necessarily expect them to be experienced with Greek usufruct law. So personally i would first educate myself on the matter, come to a conclusion and then raise the topic incl. my arguments to the conveyancer. 

Nickfirsttimebuyer

@Schwarzwald that is why I am asking all these questions to educate myself. I do not have experience in such subjects, unfortunately.  

@SDLT_Geek I spoke to my accountant this morning & it looks like the situation is a bit different. So my father has completed a parental donation/ benefit (γονική παροχή in Greek) of what he owns to me & my sister. He has given us main ownership of the small percentage & bare ownership of the bigger percentage (All of this was done when my mother passed away 18 years ago). When he passes away the bare ownership will automatically change to main ownership. As long as my father lives, my sister & I are not able to sell these properties. Properties includes 2 residential flats & 1 house. We have also 1 garage & 1 allotment but I believe I need to exclude these 2. So below I show you my percentages & their costs in the residential properties:

18.75% of main ownership (κύρια κυριότητα) of a 41.27sqm ground floor flat & that percentage costs EUR 3,137.07

31.25% of bare ownership (ψιλή κυριότητα) of the same 41.27sqm ground floor flat which costs EUR 4,182.77

18.75% of main ownership (κύρια κυριότητα) of a 72sqm first-floor flat & that percentage costs EUR 8,209.45

31.25% of bare ownership (ψιλή κυριότητα) of the same 72sqm first-floor flat which costs EUR 10,945.94

50.00% of bare ownership (ψιλή κυριότητα) of an 86.29sqm house which costs EUR 22,021.24.

This is exactly what I will provide to my solicitor & I will also attach the formal document submitted to the Greek tax authorities proving all this information & showing the percentages & the their respective costs.

Am I still considered owner of flats even if I own the bare ownership?
Since the number of properties are 3 I guess I automatically fall under the most expensive category?
Any ideas what would be the SDLT I will be paying now?

SDLT_Geek

Nickfirsttimebuyer said:

@Schwarzwald that is why I am asking all these questions to educate myself. I do not have experience in such subjects, unfortunately.  

@SDLT_Geek I spoke to my accountant this morning & it looks like the situation is a bit different. So my father has completed a parental donation/ benefit (γονική παροχή in Greek) of what he owns to me & my sister. He has given us main ownership of the small percentage & bare ownership of the bigger percentage (All of this was done when my mother passed away 18 years ago). When he passes away the bare ownership will automatically change to main ownership. As long as my father lives, my sister & I are not able to sell these properties. Properties includes 2 residential flats & 1 house. We have also 1 garage & 1 allotment but I believe I need to exclude these 2. So below I show you my percentages & their costs in the residential properties:

18.75% of main ownership (κύρια κυριότητα) of a 41.27sqm ground floor flat & that percentage costs EUR 3,137.07

31.25% of bare ownership (ψιλή κυριότητα) of the same 41.27sqm ground floor flat which costs EUR 4,182.77

18.75% of main ownership (κύρια κυριότητα) of a 72sqm first-floor flat & that percentage costs EUR 8,209.45

31.25% of bare ownership (ψιλή κυριότητα) of the same 72sqm first-floor flat which costs EUR 10,945.94

50.00% of bare ownership (ψιλή κυριότητα) of an 86.29sqm house which costs EUR 22,021.24.

This is exactly what I will provide to my solicitor & I will also attach the formal document submitted to the Greek tax authorities proving all this information & showing the percentages & the their respective costs.

Am I still considered owner of flats even if I own the bare ownership?
Since the number of properties are 3 I guess I automatically fall under the most expensive category?
Any ideas what would be the SDLT I will be paying now?

I am busy just now, but these brief points will help a bit:

1.  The £40,000 or more test is "per dwelling".  So let us say that your percentage shares in the three properties are now worth £35,000, £30,000 and £20,000 you would not be liable to the 3% surcharge, because no one of them is worth £40,000 or more.  (But that does not address the issue about the bare ownership / usufruct.)

2.  You use the word "costs".  What matters is the market value of the Greek properties (or if appropriate your share in them) as at the date of the completion of your purchase in England.

3.  I feel you would be better doing some more ground work before passing all of this to your solicitor.  This is complicated stuff, well out of what they would normally expect to advise on.

4.  There is a bit about first time buyers' relief and usufructs buried away here https://www.blakemorgan.co.uk/wp-content/uploads/Downloads/Stamp-Duty-Land-Tax-First-Time-Buyers-Relief-29052019.pdf but the analysis depends on the detail.

SDLT_Geek

I have had a better look at the information you posted. 

It is pretty clear to me that you will not qualify for first time buyers' relief because of the 18.75% share you seem to own outright in two properties.  So the answer to the question you posed, of whether you are a first time buyer for SDLT purposes, is a clear "NO".

But that still leaves the issue as to whether you might have to pay the extra 3% on your purchase.

Are the properties worth so little that their ownership cannot mean the 3% extra is due?

For each of the three properties you have some form of 50% share, either just as a bare ownership, or a combination of bare ownership and beneficial (I think that would be the English equivalent) ownership.

That being the case, if each of the three Greek properties are (individually) now worth (looking in each case at the full market value of the 100% interest) under £80,000 then (even without getting into the intricacies of trying to apply English law to the Greek law concept of this particular usufruct) there is no issue with the 3% surcharge.

Are the properties worth so much that your share owned outright on its own means the 3% extra is due?

If any one of them is worth £80,000 or more as a whole, then the next thing is to see if you are sunk anyway by your fractional beneficial ownership in either of the flats being worth £40,000 or more.  You put these at:

18.75% of main ownership (κύρια κυριότητα) of a 41.27sqm ground floor flat
18.75% of main ownership (κύρια κυριότητα) of a 72sqm first-floor flat

If either of those 18.75% shares is worth £40,000 or more, you are sunk anyway, so far as the 3% extra is concerned, without needing to look at the difficult usufruct issues.

If neither of those apply

If neither of those apply, the 3% surcharge position will be complicated.  You will need copies of the documents setting up the usufructs, a translation, and a specialist who can get to the bottom of it all.