Stamp duty question regarding second home reclaim

silvercar

CharlieCheeze said:

SDLT_Geek said:

CharlieCheeze said:

user1977 said:

Any reason why you need to retain ownership, rather than, say, registering a charge over the property for the amount of the discount?

I haven't really looked in to the various ways of doing it. I will have a look at that, thanks, but I'm assuming at this stage that the effect of not getting my 5% back on the second home might be the same? Also, I'm pretty sure the buyers mortgage provider might not like the idea as it may be a conflict of interests.

An example might help.  Say your house is worth £200,000 and you are prepared to lend them back 25% of the value, that is £50,000.  So they need £150,000 on top of the costs of moving.  

Say they have £40,000 available and want to borrow £110,000.

Their purchase would look like this:

• It would be for a price of £200,000
• Of which they put in £40,000
• A commercial lender lends them £110,000 against a first charge on the property
• You lend them £50,000 against a second charge on the property
• A deed of priority (or deed of postponement) makes clear that the commercial lender's security ranks ahead of yours.

Not all commercial lenders would lend on those terms, but a mortgage broker might well be able to find the buyers a lender who would.  The buyers would need to make the running on this, once you outline the basis on which you would be prepared to sell to them.

Thanks, very informative illustration. Problem is, the couple in question are currently renting and have little to no deposit. Still not impossible I suppose, but I also need to keep my interest below £40K at market value. It's an interesting view and I take it on board. The primary lender would certainly have the majority interest. That would be circa 80% I will run these ideas past them and see if they can secure a mortgage in principal on similar terms.

It would seem the rules on SDLT would also dictate that this need to happen fast as I'm likely to purchase the second property within 6 weeks. If it's meant to be it is.

Many thanks for your input!

From the couples point of view, your loan would be ideal as a deposiT, to secure a mortgage on the remaining 80%. Their problem is that lenders almost invariably want gifted deposits not loans, so are unlikely to lend on this basis, even with your loan playing second fiddle to the commercial mortgage.

saajan_12

CharlieCheeze said:

SDLT_Geek said:

CharlieCheeze said:

user1977 said:

Any reason why you need to retain ownership, rather than, say, registering a charge over the property for the amount of the discount?

I haven't really looked in to the various ways of doing it. I will have a look at that, thanks, but I'm assuming at this stage that the effect of not getting my 5% back on the second home might be the same? Also, I'm pretty sure the buyers mortgage provider might not like the idea as it may be a conflict of interests.

An example might help.  Say your house is worth £200,000 and you are prepared to lend them back 25% of the value, that is £50,000.  So they need £150,000 on top of the costs of moving.  

Say they have £40,000 available and want to borrow £110,000.

Their purchase would look like this:

• It would be for a price of £200,000
• Of which they put in £40,000
• A commercial lender lends them £110,000 against a first charge on the property
• You lend them £50,000 against a second charge on the property
• A deed of priority (or deed of postponement) makes clear that the commercial lender's security ranks ahead of yours.

Not all commercial lenders would lend on those terms, but a mortgage broker might well be able to find the buyers a lender who would.  The buyers would need to make the running on this, once you outline the basis on which you would be prepared to sell to them.

Thanks, very informative illustration. Problem is, the couple in question are currently renting and have little to no deposit. Still not impossible I suppose, but I also need to keep my interest below £40K at market value. It's an interesting view and I take it on board. The primary lender would certainly have the majority interest. That would be circa 80% I will run these ideas past them and see if they can secure a mortgage in principal on similar terms.

It would seem the rules on SDLT would also dictate that this need to happen fast as I'm likely to purchase the second property within 6 weeks. If it's meant to be it is.

Many thanks for your input!

If there's a mortgage, you almost certainly won't be able to co-own the property without being on the mortgage and equally liable to pay it. Reason is lenders can't repossess half (or 80% of) a house.. so they need you to agree they can take your % too, which usually means be on the mortgage.

You very likely won't be able to be on the mortgage with them if you aren't a parent or don't live there. Plus you'd need to pass affordability after deducting your own living costs (ie mortgage for your new property). 


I would take back and assess the goal here. People can rent for a season, its money spent on housing them, repairing the house they live in. It doesn't sound like they are ready to be on the ladder.