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Stamp duty and joint property purchase

(7 Posts)
Worzel77 Wed 29-Nov-17 21:35:15

My sister and I are due to inherit a few thousand pounds each in a relative's will and I would like to use the money to help my sister to buy a small flat as she is currently living in rented accommodation. She would be a first time buyer but I already own a property which I live in and another which I rent out. I live in a different town to my sister.

How would this work with regards to stamp duty and what would be the best way to go about setting things up? Would it be better to just gift her the money so the house was 100% in her name? Ideally I would like my name to be on the deeds so that I can pass down my share of the property to my son, although I would trust my sister to leave my share at least to my son in her will. She doesn't have children of her own.

The other issue is as she is on a low income she may not be able to borrow enough to buy a property without the bank taking my income into account also. I am prepared to be jointly liable for the mortgage with her if this is the case.

Any advice would be much appreciated.

user1487194234 Thu 30-Nov-17 06:08:12

Not sure about in England but in Scotland if you are on the title the additional dwelling supplement would apply
If you gift the money it won’t Gift would have to be declared to mortgage company
It is risky to rely on anyone to leave a property to someone else
No matter how close you are
If your income is needed for the mortgage you would generally need to go on the title and the security
Hope this helps

Poosnu Thu 30-Nov-17 06:20:16

Yes the 3% surcharge would apply to the whole property purchase.

You could instead consider loaning your sister the money, and to be safe registering a charge over the property to secure your loan. This may have implications for your sister raising a mortgage (and any charge in favour of a bank lender would in any event rank before yours).

With a loan you would not benefit from a share of any capital appreciation in the property, although the loan agreement between you could make provision for interest to be paid, or rolled up and paid when the property is sold, or you/your sister die.

Worzel77 Thu 30-Nov-17 12:04:47

Thanks for your replies. Really helpful. So basically if she need me to be joint names on the mortgage so she could raise enough fund, we would need to pay stamp duty on the property even though she is a first time buyer and would be living there herself. I assume I would need to include in my will what will happen to my share of her property on my death. Assuming it's possible to allow her to remain living in the property until my death and then for my share to pass on to my son?

thetigerthatcamefortea Thu 30-Nov-17 12:08:44

You can't officially loan her the money as the bank don't accept it. (Something to do with it adding to your debt and liabilities when looking at affordability)
So the lender would ask for proof that it's been gifted and not loaned.
Of course you can just produce this gifted deposit letter. But have a separate arrangement

therealreason Thu 30-Nov-17 21:34:24

You would have to pay additional rate stamp duty as you own other properties.

It would be advisable to own the property as tenants in common (so that you each have defined shares in the property) and to update your will to set out that your share is to pass to your son upon your death.

sunshinesupermum Thu 30-Nov-17 21:38:08

www.theguardian.com/money/2017/nov/27/will-son-get-first-time-buyer-stamp-duty-relief-joint-mortgage

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