Bank of Mum & Dad and FTB Stamp Duty Relief

relaxtwotribes
relaxtwotribes Posts: 369 Forumite
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in Mortgages & endowments
Could someone tell me, please, if a First Time Buyer buys a property with the assistance of a loan from the Bank of Mum & Dad (no commercial mortgage provider involved) will the buyer obtain FTB Relief from Stamp Duty? The loan will be unsecured and Mum & Dad will have no beneficial interest, equitable interest, rights to proceeds of sale or another interest. Thanks.
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Comments

  • GavL
    GavL Posts: 43 Forumite
    As I understand the loan would need to be “gifted” with no interest from parents in the property.
    With the repayment terms of it then being worked out personally between ftb and parents.
  • davidmcn
    davidmcn Posts: 23,596 Forumite
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    Yes, where the FTB gets their money from is irrelevant.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    As you don't need a mortgage you are just buying as if you were a cash buyer.

    the money does not need to be gifted it can be an interest free loan.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    Even if it was secured i think you'd still be OK.

    I dont see any requirement for there to be a mortgage or cash buyers not being eligible..
  • relaxtwotribes
    relaxtwotribes Posts: 369 Forumite
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    davidmcn wrote: »
    Yes, where the FTB gets their money from is irrelevant.
    getmore4less wrote: »
    As you don't need a mortgage you are just buying as if you were a cash buyer.

    the money does not need to be gifted it can be an interest free loan.
    AnotherJoe wrote: »
    Even if it was secured i think you'd still be OK.

    I dont see any requirement for there to be a mortgage or cash buyers not being eligible..

    Many thanks for your prompt replies, which confirm my thoughts exactly. I have been in correspondence with HMRC who confirm that the existence of a legal charge (there isn't one) would not disqualify a FTB from FTB relief from Stamp Duty, but rather bizarrely the FTB's solicitors seem to think that the loan itself would cause disqualification.
  • SDLT_Geek
    SDLT_Geek Posts: 2,491 Forumite
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    There is an article about SDLT and first time buyer's relief here. https://www.blakemorgan.co.uk/news-events/blog/sdlt-first-time-buyers-relief/ It supports your view that a loan does not cause a problem, it is only the property owning history of the buyer which is relevant.
  • davidmcn
    davidmcn Posts: 23,596 Forumite
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    relaxtwotribes wrote: »
    the FTB's solicitors seem to think that the loan itself would cause disqualification.
    Have they explained their rationale?
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    relaxtwotribes wrote: »
    Could someone tell me, please, if a First Time Buyer buys a property with the assistance of a loan from the Bank of Mum & Dad (no commercial mortgage provider involved) will the buyer obtain FTB Relief from Stamp Duty? The loan will be unsecured and Mum & Dad will have no beneficial interest, equitable interest, rights to proceeds of sale or another interest. Thanks.

    The transaction though is not at arms length. You are in effect connected parties. Therefore not acting in your own self interests, i.e. independently.
  • SDLT_Geek
    SDLT_Geek Posts: 2,491 Forumite
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    Thrugelmir wrote: »
    The transaction though is not at arms length. You are in effect connected parties. Therefore not acting in your own self interests, i.e. independently.
    Whilst this is true I do not see that it affects the SDLT treatment if it is clear that the parents will have no beneficial interest, equitable interest, rights to proceeds of sale or another interest in the property, but merely the benefit of a loan (with or without security for the loan).
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    relaxtwotribes wrote: »
    Many thanks for your prompt replies, which confirm my thoughts exactly. I have been in correspondence with HMRC who confirm that the existence of a legal charge (there isn't one) would not disqualify a FTB from FTB relief from Stamp Duty, but rather bizarrely the FTB's solicitors seem to think that the loan itself would cause disqualification.

    Ask them to show you the relevant section in the law which states that a private loan disqualifies. Given that the words "mortgage" and "loan" don't even appear in the law (AFAICS) , and that the parents have no beneficial interest in the house, they appear to be making things up as they go.
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