AIBU to think conveyancer wrong about Stamp Duty?

[ConfusedbyConveyancing]

Me and my fiancé are buying a house together. We currently own a property each; he owns a house and I own a flat. We currently live together in his house, and he is selling his house for us to buy the new house together. His house and the new house are both in the same Northern city, whereas my flat is ion down south. I'll continue to own my flat after we have bought the new house together.

Our conveyancer has said that he thinks we will have to pay the higher rate stamp duty on the new house we are buying (due on additional properties) because I will continue to own a residential property.

We both live in my partner’s house currently. There is a lodger living in my flat (not a tenant, as I still sleep there about once a week for work). I am included on the council tax at my partner’s house, our child goes to nursery close to his house, and we are all registered for the GP near his house.

I think that if we were to get married now then we would be (i) buying the new house as an individual, and (ii) replacing our main residence; and would therefore pay the normal rate of stamp duty. I used the gov.uk calculator Stamp Duty Land Tax Calculator to work it out.

I sent the conveyancer a link to the gov.uk stamp duty calculator showing we should attract the normal rate of stamp duty if we get married now, but he said his interpretation is that we will have to pay the higher rate regardless – without really explaining.

The property purchase price is £390,000, so the normal rate of stamp duty would be £9,500, whereas the higher rate would be £29,000. It’s a big difference. :/

Am I unreasonable to expect an explanation from the conveyancer, or is this not his job?

And have I understood the stamp duty rules wrong?

You've understood the stamp duty rules wrong, sorry. You owe the higher rate as one of the owners also owns another property, and will continue to do so through the process of the new house purchase. The rest, and being married or not, is irrelevant for stamp duty purposes.

You are buying an additional residential property, therefore you will owe the stamp duty.

That you rent your other property out doesn’t matter - you will end up owning an extra property.

You need to sell your flat, but you have three years to do that and can reclaim the money.

I disagree with PPs. A sale of the main residence for a new main residence is standard rate, despite owning additional properties.

No idea the rules about proving main residence but do you have utility bills / bank statements with your name on at partner’s house?

edited to say - it’s always a bit unclear so definitely don’t rely on mumsnet for advice. But also do continue to investigate and speak to the gov helpline. I got bad advice from solicitor that cost me almost £12k.

Deleted as thought you were talking about relief for FTB! Apols.

You still own it. I think part of the point is to clamp down on people buying second homes and holiday lets. Some people will own additional properties that they have never lived in.

You owe the higher rate unfortunately. It sucks I now. We’re in the same situation but DH is a co-owner (with his other 3 siblings) on his parents house (they’re still living there, free of course), and even we have to pay the higher rate which us just awful since we don’t actually own any other property!

That is incorrect I’m afraid. When you’re filling out the form it asks if you own any other properties or have a share in a property, and if so, you pay the higher rate. DH has a share in his parents property (who are alive and living there rent free) so even though he doesn’t own the property outright (shared between 4 children), and he isn’t currently benefiting financially (parents living there for free) we are still liable to pay the higher rate!

You are incorrect. Being married or not is irrelevant. I just bought with my DP and am retaining a property for 2 years. We paid the higher rate and I will get the difference back if I sell within 3 years as it’s my main residence.

This is a second homd for you. As you already own a property.

If you buy now before you are married, and the new house and mortgage go solely in DPs name them you wouldn't have to pay the extra. If it's in joint names, regardless of whether you're married you'll have to pay extra.

Not necessarily. OPs situation is more complex as she only has a lodger in hers, so I wouldn’t like to say for sure. But in my case:

house 1 - main residence
house 2 - my btl
house 3 - DH btl

Sold house 1, moved to a new main residence, kept both other investment properties. Stamp duty charged at higher rate but the higher rate portion could be reclaimed, leaving us paying basic rate.

Hi @Hey12345
That is really horrible for you.
How do you know/how are you so sure you'll have to pay the higher rate, have you had legal advice? If so, what kind of professional can advise on this kind of thing?

He is right I’m afraid. I am buying a property for my parents and I have to pay second home stamp duty. Also, even if I only pay part of the purchase price (say I paid £200k and they pay £100k for a £300k property) second home stamp duty is due on the full amount, even though they would be funding their part of the purchase through the sale of their principle primary residence. I had this confirmed by my solicitor. It’s shit.

This. I think it is main residence that counts. I have another property and when we last moved we didn't pay additional rate because the other property is a rental. Marriage is irrelevant but main residence is important - your situation sounds slightly more confusing given you stay at your other property but I think you can nominate your main residence

Your conveyancer is right, you will owe the higher stamp duty.

Yes, but how you much will he save in inheritance tax that he would have had to otherwise pay had his parents house actually been in their own names?

You're correct.

There's an exemption if you are selling your main home and purchasing a new main residence.

Stamp Duty Land Tax 3% surcharge ‘Replacement of only or main residence’ and the three-year rules - BM Insights - Blake Morgan https://share.google/byysPTYlmBBwkqQDP

@Hey12345 Which form do you mean?

I filled in the online form on the gov.uk stamp duty calculator, and selected 'yes' regarding additional properties. The next question was then 'are you replacing your main residence' and I put yes, and then it showed £9,500 as the result. ie. the lower rate. https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#!/intro

I asked the conveyancer for the actual form (not the calculator) that we'll have to complete at the time of the purchase but he said he can't share that as it's an online form.

It only applies when you are selling and buying at the same time for some reason.

You are correct OP ignore most of the replies on this thread, they're wrong.

You’re right. Honestly, don’t let PPs and your solicitor tell you otherwise. I’ve been in the situation. If it’s your main residence that’s changing, it’s lower rate. I was told the same as you. Discovered that it was wrong a couple of weeks after the deadline to reclaim the higher rate portion. I lost 12k and the stamp duty office confirmed we would have been eligible to only pay standard rate.

You’re right. Honestly, don’t let PPs and your solicitor tell you otherwise. I’ve been in the situation. If it’s your main residence that’s changing, it’s lower rate. I was told the same as you. Discovered that it was wrong a couple of weeks after the deadline to reclaim the higher rate portion. I lost 12k and the stamp duty office confirmed we would have been eligible to only pay standard rate.

If you and your partner both owned the house you are living in the fact that you also own a flat would not make you liable as you are
replacing main residence
Am not sure what happens as you are not the owner but definitely worth double checking

I think the bit that might be problematic is the lodger, not tenant' situation.

What type of mortgage is on your flat? BTL or residential? Are you on the council tax at the flat? Utility bills?

In theory, replacing your main residence doesn't attract the premium, but I wonder if you aren't separated enough from the flat down south?