House buying/SDLT question

jackieblack

I have been on gov.uk but can't quite get my head around this so hoping someone more knowledgable here might be able to help 🤞🏻

My daughter, son-in-law and I would like to buy a house together (we have discussed this at length over some months, and are all in agreement).
S-i-l's job is a zero hours contract so they are not currently able to get a mortgage.

We were wondering, if I bought the house in my sole name (approx £550k), with a small mortgage (about £70k), then at some point in the next year or two, when they are able to get a mortgage, could they buy a share of the property (say 25%) from me? (is this something a lender might accept?) 
I would gift them a further 25%

What would the SDLT situation be? 

They are FTB (I am not)
The house would be the only residence and only property owned by each of us.
Thank you

silvercar

If you weren't going to live in the property I would suggest a joint borrower, single proprietor mortgage. That way you go on the mortgage but only they go on the deeds. The mortgage is then based on your income as well, but the property is only owned by your daughter and son-in-law. That allows them to use their first time buyer status and so reduces SDLT. It also means they have the mortgage you intend for them from day 1.

If you are going to be a (part) owner, your name will need to remain on the mortgage. 

jackieblack

Thanks
We will all be living there
Initially I would be buying it alone

It's how the next part would work in a year or two that we're not sure about

_Penny_Dreadful

jackieblack said:

I have been on gov.uk but can't quite get my head around this so hoping someone more knowledgable here might be able to help 🤞🏻

My daughter, son-in-law and I would like to buy a house together (we have discussed this at length over some months, and are all in agreement).
S-i-l's job is a zero hours contract so they are not currently able to get a mortgage.

We were wondering, if I bought the house in my sole name (approx £550k), with a small mortgage (about £70k), then at some point in the next year or two, when they are able to get a mortgage, could they buy a share of the property (say 25%) from me? (is this something a lender might accept?) 
I would gift them a further 25%

What would the SDLT situation be? 

They are FTB (I am not)
The house would be the only residence and only property owned by each of us.
Thank you

They’re not going to be able to get a mortgage to buy 25% of the property. They’d need to buy the whole property and there will be an issue with gifted equity coming from someone who will continue to live in the property. 

saajan_12

Depending on your age, you should be able to buy on  your own and get a mortgage, with them both as permitted occupiers, with zero claim on the property. 

Then in a couple of years, you'd need to remortgage into joint mortgage for all 3 of  you, which would pay off your 70k mortgage (or whatevers left) plus 25% of the value that you want them to pay you. The deed can say whatever split eg they own 50% (25% paid and 25% gift from you). You could also split the mortgage payments however you wish, but for the lender, they could chase any of you for the whole thing. 
This is theoretically possible, but you may be restricted in lenders who will lend to 3 people. 

Their SDLT would effectively be on 140k which is what they are paying. 

jackieblack

saajan_12 said:

Depending on your age, you should be able to buy on  your own and get a mortgage, with them both as permitted occupiers, with zero claim on the property. 

Then in a couple of years, you'd need to remortgage into joint mortgage for all 3 of  you, which would pay off your 70k mortgage (or whatevers left) plus 25% of the value that you want them to pay you. The deed can say whatever split eg they own 50% (25% paid and 25% gift from you). You could also split the mortgage payments however you wish, but for the lender, they could chase any of you for the whole thing. 
This is theoretically possible, but you may be restricted in lenders who will lend to 3 people. 

Their SDLT would effectively be on 140k which is what they are paying. 

Thanks,
One problem is that with me on the mortgage they'd be limited to a shorter term, meaning higher monthly payments, but it's still a fairly modest mortgage, by today's norms, and definitely something we can explore... the mortgage would just be 25% of the original purchase price (so around £137.5k) and I would repay my mortgage out of that. 

Assuming thresholds remain the same, would they get the benefit of being FTB in terms of their SDLT bill?

sheramber

All purchasers must be first time buyers and as you are not a frirst time buyer they cannot claim first time buyer relief.

jackieblack

sheramber said:

All purchasers must be first time buyers and as you are not a frirst time buyer they cannot claim first time buyer relief.

That’s what I thought

jackieblack

Ok, thanks all for your input
Having revisited this, we’re reviewing purchase options. Seems like it would be better to remove the mortgage from the equation. It’d mean postponing some other short/mid term plans but much simpler in the long run