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SDLT - avoid 3% surcharge?
GDB2222
Posts: 25,953 Forumite
I'm asking on behalf of a family member.
Alan and his partner Beth are buying a flat jointly. They don't own their current home. They are each putting in part of the deposit, and they will have a joint mortgage.
Alan owns an investment property, and Beth doesn't own any property. Because Alan already owns a property, they will need to pay the extra 3% SDLT on the flat they are buying.
Their solicitor has suggested that the flat is registered in Beth's name only, with a declaration of trust setting out Alan's beneficial interest in the flat. He says that this way the extra 3% SDLT is not payable.
I'm really surprised that this can be right. It seems 'too good to be true', really.
Are there any SDLT experts who would care to comment, please?
As a follow-up question, is it possible for Alan and Beth to put a restriction on the Land register, to protect Alan's position in case they fall out at a later date?
Alan and his partner Beth are buying a flat jointly. They don't own their current home. They are each putting in part of the deposit, and they will have a joint mortgage.
Alan owns an investment property, and Beth doesn't own any property. Because Alan already owns a property, they will need to pay the extra 3% SDLT on the flat they are buying.
Their solicitor has suggested that the flat is registered in Beth's name only, with a declaration of trust setting out Alan's beneficial interest in the flat. He says that this way the extra 3% SDLT is not payable.
I'm really surprised that this can be right. It seems 'too good to be true', really.
Are there any SDLT experts who would care to comment, please?
As a follow-up question, is it possible for Alan and Beth to put a restriction on the Land register, to protect Alan's position in case they fall out at a later date?
No reliance should be placed on the above! Absolutely none, do you hear?
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Comments
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@SDLT_geek has previously posted that if there is a (documented) beneficial interest then the additional rate still applies irrespective of the fact the other person (I assume "partner" means not legally married/civil partnership?) is not on the deeds as a legal co-owner.
a simple declaration of trust such as you imply is, in technical terms, a bare trust, see here:
SDLTM09815 - SDLT - higher rates for additional dwellings: interests treated as owned by an individual, trusts, children [including children subject to the Mental Health Acts] - HMRC internal manual - GOV.UK1 -
Thanks very much. That's rather what I suspected.
No reliance should be placed on the above! Absolutely none, do you hear?1 -
Unfortunately the suggestion made is incorrect. SDLT on a purchase "looks through" to the beneficial owners.GDB2222 said:I'm asking on behalf of a family member.
Alan and his partner Beth are buying a flat jointly. They don't own their current home. They are each putting in part of the deposit, and they will have a joint mortgage.
Alan owns an investment property, and Beth doesn't own any property. Because Alan already owns a property, they will need to pay the extra 3% SDLT on the flat they are buying.
Their solicitor has suggested that the flat is registered in Beth's name only, with a declaration of trust setting out Alan's beneficial interest in the flat. He says that this way the extra 3% SDLT is not payable.
I'm really surprised that this can be right. It seems 'too good to be true', really.
Are there any SDLT experts who would care to comment, please?
As a follow-up question, is it possible for Alan and Beth to put a restriction on the Land register, to protect Alan's position in case they fall out at a later date?1 -
If the declaration of trust only comes after the purchase, who is looking through and at what are they looking?SDLT_Geek said:
Unfortunately the suggestion made is incorrect. SDLT on a purchase "looks through" to the beneficial owners.GDB2222 said:wI'm asking on behalf of a family member.
Alan and his partner Beth are buying a flat jointly. They don't own their current home. They are each putting in part of the deposit, and they will have a joint mortgage.
Alan owns an investment property, and Beth doesn't own any property. Because Alan already owns a property, they will need to pay the extra 3% SDLT on the flat they are buying.
Their solicitor has suggested that the flat is registered in Beth's name only, with a declaration of trust setting out Alan's beneficial interest in the flat. He says that this way the extra 3% SDLT is not payable.
I'm really surprised that this can be right. It seems 'too good to be true', really.
Are there any SDLT experts who would care to comment, please?
As a follow-up question, is it possible for Alan and Beth to put a restriction on the Land register, to protect Alan's position in case they fall out at a later date?I'm a Forum Ambassador on the housing, mortgages, student & coronavirus Boards, money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
He's contributing to the deposit and will be party to the mortgage but not the ownership? It may be possible to find a lender willing to do a JBSP application on that basis, but for the reasons given above it's a bit "whiffy" SDLT-wise.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.1
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If this was parent/ child or uncle/ niece it would be standard JBSP with a gifted deposit.kingstreet said:He's contributing to the deposit and will be party to the mortgage but not the ownership? It may be possible to find a lender willing to do a JBSP application on that basis, but for the reasons given above it's a bit "whiffy" SDLT-wise.The difference here is that they both intend living in the property and presumably they are not related.I'm a Forum Ambassador on the housing, mortgages, student & coronavirus Boards, money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.2 -
I think the solicitor was confused about this. Unfortunately, as a result of the poor advice, Alan and Beth are having to consider whether to continue with the purchase.silvercar said:
If this was parent/ child or uncle/ niece it would be standard JBSP with a gifted deposit.kingstreet said:He's contributing to the deposit and will be party to the mortgage but not the ownership? It may be possible to find a lender willing to do a JBSP application on that basis, but for the reasons given above it's a bit "whiffy" SDLT-wise.The difference here is that they both intend living in the property and presumably they are not related.No reliance should be placed on the above! Absolutely none, do you hear?0 -
Exactomundo. Like I said, I think it can probably be done even taking into account the occupants but it may not be a good idea, either way.silvercar said:
If this was parent/ child or uncle/ niece it would be standard JBSP with a gifted deposit.kingstreet said:He's contributing to the deposit and will be party to the mortgage but not the ownership? It may be possible to find a lender willing to do a JBSP application on that basis, but for the reasons given above it's a bit "whiffy" SDLT-wise.The difference here is that they both intend living in the property and presumably they are not related.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
if Alan and Beth continue with the purchase, they might be well advised to consider changing solicitor ....GDB2222 said:
I think the solicitor was confused about this. Unfortunately, as a result of the poor advice, Alan and Beth are having to consider whether to continue with the purchase.silvercar said:
If this was parent/ child or uncle/ niece it would be standard JBSP with a gifted deposit.kingstreet said:He's contributing to the deposit and will be party to the mortgage but not the ownership? It may be possible to find a lender willing to do a JBSP application on that basis, but for the reasons given above it's a bit "whiffy" SDLT-wise.The difference here is that they both intend living in the property and presumably they are not related.2 -
Might need to adjust the title to 'SDLT - avoid 5% surcharge?'2
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