Information Required on 'House Swap'

Nick_A_2

Hi, I am trying to find information regarding the 'things to consider' when doing a house swap (permanant). Assumption: the two houses in question are the same price.

Can anyone offer any advice/information regarding this....particularly the legal aspects?

Thanks in advance,

Nick.

Doozergirl

Would this be social housing or privately owned?

baileysbattlebus

It looks like this would be private housing as the OP mentions the 2 houses being the same price
The prices were different but our current house was a swap unfortunately both houses on with estate agents. We viewed a house we liked (needed bigger) told the owners we would like to buy the house once ours had sold. The owners wanted a smaller house, they veiwed our house and liked it and wanted it.
We took out a mortgage on the new house all went through a solicitor as normal and at the end of the day we only paid stamp duty on the difference in price between the 2 houses. If house prices are the same I would imagine there is no stamp duty to pay - I could be wrong of course as we did this over 10 years ago. Our only regret is the estate agents - we still had to pay them although we "sold" our house ourselves, the alternative was to wait 6 months and do it then, but both families wanted to move asap. Both sets of solicitors knew we were "swapping".
It was the easiest, least stressful move we have ever made.
So from what I remember -
conveyancing as a normal "buy and sell"
stamp duty paid on the difference in price - not the full amount that would normally have been due

PasturesNew

Legally it is the same as if you were buying any other house.
The same processes will be gone through as you are redeeming a mortgage, securing a mortgage on another house. Same value is irrelevant for this bit, you'd still go through the same mortgage processes.

The main issue is: don't let your judgement be clouded by the convenience of this swap unless your need is greater than the annoyances you know/spot.

I am surprised by baileysbattlebus' comment re stamp duty. I'd have assumed any/all stamp duty was due/payable by both parties as per normal. However, if both houses are the same value and just over a threshold, you need to offer/accept each others' houses at a lower rate. Not silly low, but reasonable/believable low.

baileysbattlebus

Sorry Pasturesnew - you are right the rules changed in 2003 - we did our swap over 10 years ago when the rules were different.

After completion, you must send a Land Transaction Return to the Revenue and Customs Stamp Taxes Office providing details of the value of the house you have acquired.

Previously, stamp duty was normally only payable on the amount of any balancing payment.

If the difference in value of two exchanged properties was less than the lowest threshold for the payment of stamp duty, nothing was payable by either owner.

However that all changed when the government introduced Stamp Duty Land Tax (SDLT) in 2003.

Now, only limited categories of exchanges of property are exempt from SDLT. An exchange between private individuals is not one of them.

You and the owner of the other house will each have to pay SDLT on the full value of the property acquired.

Nick_A_2

Both houses are private.....one house is freehold and the other house has a newly aquired mortgage.....but it looks as though it does not matter and stamp duty has to be paid by both of the owners.

Are there any other things the owners need to consider?

Thanks,

Nick

ffacoffipawb

baileysbattlebus wrote: »

Sorry Pasturesnew - you are right the rules changed in 2003 - we did our swap over 10 years ago when the rules were different.

After completion, you must send a Land Transaction Return to the Revenue and Customs Stamp Taxes Office providing details of the value of the house you have acquired.

Previously, stamp duty was normally only payable on the amount of any balancing payment.

If the difference in value of two exchanged properties was less than the lowest threshold for the payment of stamp duty, nothing was payable by either owner.

However that all changed when the government introduced Stamp Duty Land Tax (SDLT) in 2003.

Now, only limited categories of exchanges of property are exempt from SDLT. An exchange between private individuals is not one of them.

You and the owner of the other house will each have to pay SDLT on the full value of the property acquired.

Presumably the loophole of selling both houses for £120,000 (say) regardless of true "value" to avoid stamp duty is not available?