To ask how to avoid 2nd home rate stamp duty

[Stampdutywoes]

Hear me out before you attack.

Currently living in rental property after splitting with ex partner. We own the home he is living in jointly.
The landlord of my rental wants to sell and I would like to buy it but the additional 5% stamp duty rate for what would count as a second home is a killer.
Are there any conveyancing solicitors who could advise on how to avoid (not evade) this extra 5%?

I haven’t actually mentioned any percentages but you are ridiculous suggesting I am being mean to the landlord to make a low offer. It is a business transaction and he has no obligation to accept any offer from me or anyone else.

@Stampdutywoes one option could be for your ex to buy you out of the old property. He doesn’t need a mortgage for this because you could lend the money for a 50% share to him. You secure that loan via first charge on said property. You come off the title deeds and no longer own 50%. The loan states that your loan interest is a 50% return on the increase in capital value at the point of death or sale. You could then purchase the second property in your name with no second home SDLT, though you may have some CGT to pay for the last 5 years it hasn’t been you principal private residence. If you really want to own 50/50 you could then get married, transfer ownership to 50/50 (not tax implications when between a married couple) and then get divorced again. The costs of all of that would need weighed up against the extra 5% SDLT and obviously assumes you both remain on good terms/trust each other as you say you do.

Interesting. Do you work in this field @daisymoo2

I only own half a property - should DH and I be allowed to buy another one without paying higher rate stamp duty? Of course not. There's obviously some benefit to the arrangement you want therefore you need to accept the downside.

I think we ascertained that a few hours ago but thanks for joining in.

Well I don’t think you can avoid it if you want to own half of two homes.

You will each have to own the whole of just one in order to not pay it.

Good grief, have you read any of the previous posts?

Dont be ridiculous, people offer prices based on their affordability, you stamp duty and mortgage rates are all about affordability. What next, people who offer below asking because the mortgage rate has gone up being 'mean'??

People also accept or dont accept offers based on what they need for their ongoing purchase or paying off debt or wanting as much as they can - are they also mean?

@Stampdutywoes I don’t work in this field, you’d need to discuss with your lawyer. Just an idea for you to take to them!

This is nonsense. There is a window in which to get the additional stamp duty back if there is some overlap between owning your initial family home and then purchasing a new one. It might cause cashflow hardship - but the money is given back very promptly by HMRC.

The number of people who end up owning two homes permanently after divorce is vanishingly rare. Most people have more sense ...

Thanks

What is the cash difference between the SDLT if it's your only home and if it's your notional second home? It would depend on purchase price so it's impossible for us to know from what's been said so far. Just trying to gauge if the sums involved actually warrant this level of agonising. Not that I think your set up is prudent in a general sense either, but given that the reason you posted was for financial information.

This is bonkers.

I was wondering this. I mean the bloke's house must be MEGA expensive if its so unique as to not be capable of valuation...

Yet OP says hers is definitely less. And it must be so much less that even factoring in regular SDLT split between them - her ex can afford to cough up the cash to buy the second house. How very strange ....

There are surveyors that do valuations exactly for this purpose. You don’t need to guess the value, you get it valued by a surveyor who does valuations. If you want to, you could get a couple of valuations for comparison. Co-owning a home with an ex because you don’t want to get the home valued is madness.

It’s an extra 5% on all the tiers. So on a £500k property for example it would be an extra £25k for a second property

But you're not at all financially independent of him if you own 2 properties together are you?

If he incurs debt, it affects your credit record because of a shared address.

If he secures a loan with his share of the property, that has implications for the liquidity of your share of the asset.

If he shacks up with someone 30 years his junior & reproduces (and lets face it, he wouldn't be the first asset rich, cash poor, "gentleman" of a certain age in all of history to do THAT if it happened, that affects your ability to live in/sell the house he will live in, and potentially your 'own' as well.

Why play at being financially independent when in fact, you are seeking to intentionally make yourself even more inextricably linked to him and any future partners and heirs he moves on with???

You have a very active imagination. I think I would notice if a leggy blond starts hanging around

In fairness he would not be able to take on a mortgage on the house without the OP being party to it (thankfully those days have long gone ...)

But the other practical considerations re future partner, repairs, insurance, damage, improvements are totally vaild

How would you know? You're living in a different house & have been for 5 years already ffs!

Thanks. Not sure I fancy becoming a divorcee in that way though 😀

He does allow me on our estate though 😀

I know what the rules are. I meant what is the specific sum of money for the property you're proposing to buy from your landlord? Is it a £500K property? Given what you've said so far, is an extra £25K really worth all this handwringing to you? Compared with the costs involved in, say, altering the title on House 1, possibly paying CGT, getting married and divorced again in short order, etc etc, all of which have been mentioned on the thread and you've appeared to think worth considering.

Regardless - there would be nothing she could do if he got a new partner and she decided to do things differently re the house.

FWIW @Stampdutywoes - I had to pay the extra stamp duty when I bought a new house with my partner - in a place I will be moving to in 6 months. I still own my main residence but that will be sold. I am very aware of the 3 year deadline for getting rid of the first house when circumstances allow. I won't be giving up that large chunk of money thats for sure. But there was certainly no way to avoid it ...

You need to view it as a lost cost of structuring your affairs in this very unusual way.

Tens of thousands is a lot of money to us, hence the original question, but we can manage to cover it if we can get the property at a good price.