Stamp duty if switching mortgage (boring klaxon!)

[Lemond1fficult]

Sorry in advance for the boring question.

I'm looking at buying my first property this year. At the moment I live with my dp who owns his house outright, but I'm not on the deeds.

I intend to buy a £120k flat near the seaside, and use it for weekend holidays etc. Because it's my only property i know I shouldn't have to pay stamp duty at this stage.

But what happens if in a year or two I decide to rent it out and switch to a buy-to-let mortgage? Will I have to pay the higher rate of stamp duty? Is there a time cut-off for this?

Sorry to be asking, but I can't find anything for this situation on google.

Thanks!

You won't have to pay stamp duty if you take out a btl mortgage but if you buy another house to live in you will pay the second home stamp duty

Thanks user - that's what I thought. Though if that's the case, I don't see why more people aren't taking out an owner/occupier mortgage then switching to BTL to avoid the stamp duty (which is essentially what I'd be doing).

I didn't think it was the blt bit that caused additional stamp duty, but the fact it was a second property.
So if you only own 1 property, it attracts the lower rare of stamp duty.
As soon as you buy a subsequent property, you pay the additional 3%.

I think you've misunderstood. You are liable for stamp duty when you buy a property. Changing from one type of mortgage to another doesn't involve changing ownership so you don't pay stamp duty then.

What PP said above is that if you buy a second property, you'd then be liable to stamp duty on the second property at a higher rate than your first property. This is to deter people having second homes.

Does that help?

"Married couples and civil partners who own one property at the end of the day of a transaction will not pay the higher rates of SDLT. However, if either of them owns more than one residential property they may pay the higher rates when purchasing another property.

The government will treat married couples and civil partners living together as one unit. This is consistent with other areas of the tax system including Capital Gains Tax private residence relief where married couples are entitled to relief on one residence between them.

This means that:

married couples and civil partners may own one main residence between them at any one time for the purposes of the higher rates
property owned by either partner (and any minor children) will be relevant when determining if an additional property is being purchased or not. Therefore, an individual buying a property may be liable for the higher rates if his or her spouse or civil partner has an existing residential property. If the spouse or civil partner then sells that residential property they may be able to claim a refund"

From: www.gov.uk/government/consultations/consultation-on-higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties/higher-rates-of-stamp-duty-land-tax-sdlt-on-purchases-of-additional-residential-properties

That all said I'm guessing you guys aren't married or in a civil partnership (given you used DP)? You're right that the legislation doesn't cover that. Maybe you can check with an estate agent? Good luck.

BELLARA, we're not married, no. The house is his outright.

My issue is that if I were to buy a house for owner occupier usage, I could get a mortgage with 10% deposit, and, because the house is less than 125k I wouldn't have to pay any stamp duty.

If I were to buy it as a B2L, even though it's my first property, I'd have to pay 3% stamp duty.

So am I right in thinking I could buy it as an owner-occupier at 10% with no stamp duty, then a couple of years later, pay the remainder of the 25% deposit and avoid paying stamp duty retrospectively.

Can you show the information you've seen about the stamp duty in first properties.
I think you've got confused.

Some lenders won't approve a blt mortgage if you don't already own a property. Likewise, lenders may be wary about giving you a residential mortgage when it's not your primary residence.

Perhaps advice you've read on blt assumes ownership of residential property and that's causing confusion?

OP this flowchart from the HMRC link given below might make it clearer.

What's the long term plan? The seaside flat won't attract additional stamp duty because it's your first property. But if you (or you & DP) go on to purchase another residential house (which I'm assuming will cost more than £120k) then that might be caught for additional SDLT.

So you won't be caught for the cheaper property but will for the more expensive one. Tread carefully.