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Original poster

First time buyer shenanigans

16 replies

deliwoman1 · 28/12/2023 08:23

Merry Christmas all!

So, I’m a bonefide first time buyer. Never had a stake in anything. My partner however isn’t. Unfathomably, his parents added him to the deeds of their rental property when he was 19, which he ‘managed’ and never profited from, except to live rent free (in an area and at a time when ‘rent’ would’ve cost him a whopping £25 per week 🙄, can you tell I’m annoyed?! 😂)

Anyway, he’s luckily set to inherit enough for us to buy somewhere (v. modest) outright from a distant relative. Total shock! The budget would be very tight but we think we could do it, a really incredible thing because we’re not great candidates for a mortgage especially at the moment.

If he gifted the cash to me and I bought the house alone, would I then be able to use my first time buyers discount or would it be a clear tax dodge given you have to be transparent about where the money has come from when you buy? We’re not married but we have been living together for years and we do have a child.

I would add him to the deeds after the fact and we might need a mortgage at some point to make any necessary improvements. I should add that we really do believe in paying the tax we owe! We’re just trying to work out if there’s a legal loophole we can exploit for his situation given he’s never technically bought or benefited from property and we’d really be stretching ourselves to make a purchase so saving wherever we can is crucial.

Any thoughts welcome! Thank you!

OP posts:
Mizydoscape · 28/12/2023 09:28

You would need to get permission from the lender to add someone who is not on the mortgage onto the title and they may insist your partner is also on the mortgage.

NonmagicMike · 28/12/2023 09:36

Don’t know 100% the answer and this likely needs a legal view, but assuming your other half trusts you etc etc then you might fall foul of the same rules as for help to buy? It says here that anyone being added to the deeds must also qualify as a first time buyer, so this would rule out your idea. If I were your other half I would be wanting some legal advice before handing over however many tens of grands - however strong my relationship currently is!

https://www.gov.uk/guidance/how-to-change-ownership-of-your-help-to-buy-home

How to change ownership of your Help to Buy home

How you can add, remove or replace one or more homeowners, with a process known as a Transfer of Equity.

https://www.gov.uk/guidance/how-to-change-ownership-of-your-help-to-buy-home

Original poster
deliwoman1 · 28/12/2023 09:37

Yes, to be clear, we’d buy it outright, no
mortgage. I would then add my partner to the deeds via the land registry so he was a legal owner. Only then would we apply for a small mortgage together to do any renovations.

OP posts:
Twiglets1 · 28/12/2023 09:42

deliwoman1 · 28/12/2023 08:23

Merry Christmas all!

So, I’m a bonefide first time buyer. Never had a stake in anything. My partner however isn’t. Unfathomably, his parents added him to the deeds of their rental property when he was 19, which he ‘managed’ and never profited from, except to live rent free (in an area and at a time when ‘rent’ would’ve cost him a whopping £25 per week 🙄, can you tell I’m annoyed?! 😂)

Anyway, he’s luckily set to inherit enough for us to buy somewhere (v. modest) outright from a distant relative. Total shock! The budget would be very tight but we think we could do it, a really incredible thing because we’re not great candidates for a mortgage especially at the moment.

If he gifted the cash to me and I bought the house alone, would I then be able to use my first time buyers discount or would it be a clear tax dodge given you have to be transparent about where the money has come from when you buy? We’re not married but we have been living together for years and we do have a child.

I would add him to the deeds after the fact and we might need a mortgage at some point to make any necessary improvements. I should add that we really do believe in paying the tax we owe! We’re just trying to work out if there’s a legal loophole we can exploit for his situation given he’s never technically bought or benefited from property and we’d really be stretching ourselves to make a purchase so saving wherever we can is crucial.

Any thoughts welcome! Thank you!

I'm not sure of the answer but think you should let go of your resentment that your partners family let him live rent free at a time when the rent would only have been £25 per week. Presumably that was many years ago if £25 was market rent. So he lived rent free and benefited from that at the time.

Now he has been lucky again. I think I would just be happy to use that amount as a deposit and buy a place together even though you lose the benefit of being a FTB.

MandyMotherOfBrian · 28/12/2023 09:42

If you’re not married, then presumably adding him to the deeds would attract CGT.

Onceuponaheartache · 28/12/2023 09:51

What first time buyer discount?

If you mean the government's first home scheme then you have to be able to raise a mortgage for 50% of the value of the property.

Most councils only offer it if you are classed as a key worker usually nurse/newly qualified teacher ime.

The house has to either be a new build or been bought via the scheme previously...probably by the current seller although thatvisnt clear.

see the link below but based on your op i dont think you qualify for any discount.

https://www.gov.uk/first-homes-scheme

First Homes scheme: discounts for first-time buyers

How the First Homes scheme works, who is eligible, how to apply and the rules for managing a First Homes property after you buy one.

https://www.gov.uk/first-homes-scheme

topnoddy · 28/12/2023 10:00

Mizydoscape · 28/12/2023 09:28

You would need to get permission from the lender to add someone who is not on the mortgage onto the title and they may insist your partner is also on the mortgage.

No mortgage , OP would be buying outright .

Clue is in the bit where they say this in the post

Original poster
deliwoman1 · 28/12/2023 10:02

@NonmagicMike thank you so much. This is very helpful. I think the only thing we could potentially benefit from is stamp duty relief, which for us could mean a decent saving. Worth investigating this, and yes he should get legal advice! Though it’s really only really because of him and with him that I’d like a home of our own ❤️ I’d put him on the deed asap.

@Twiglets1 You're so right! I think it’s just because I’m furiously trying to do the sums to work everything out and it’s irritating being ruled out of a lot. As I say, we’re not very mortgageable right now (despite being well qualified professionals 🙄), so any savings we can make are key. But we are so lucky to be able to try at least!

@MandyMotherOfBrian Thanks! Hadn’t thought of that so will look into it. I’d be disposing of 50% of the asset, but it would be our main home, so might skirt it. I also thought of tax on gifts though I would hopefully live 7 years after the gift, and he’d become my spouse eventually anyway (we’re engaged) so wouldn’t owe it.

@Onceuponaheartache We’re realistically only looking at stamp duty relief given our circumstances. 😕

OP posts:
Mizydoscape · 28/12/2023 10:17

@topnoddy That'll teach me for not reading the post properly. Thanks for the snotty reply

RJnomore1 · 28/12/2023 10:22

How modest a budget are you talking? In England you don’t pay stamp duty up
to £250k anyway? Varies across the UK I think.

MandyMotherOfBrian · 28/12/2023 10:28

Gifting 50% of the asset would only be tax free if you are married at the time. You don’t pay CGT on a main residence if you sell it but I’m not sure main residence status is relevant if you’re transferring a % the asset - it might also attract Stamp Duty tax. But presumably you will be getting proper legal advice.

Onceuponaheartache · 28/12/2023 10:32

the stamp.duty threshold is quite high so unless you are looking at buying a house over £435k then you wouldn't pay anyway but i think they would hugely question the ethics and legality of a single first tine buyer ebing able to afford that sort of budget. You would have to prove how you got the money and it being a "gift" from your dp is going to throw up a massive red flag that would likely mean you would not be classed as a first time buyer.

however i am not a solicitor, you would be best getting proper legal advice, but i strongly suspect you would not be classed as eligible for any discounts destined to support true FTB's

https://www.natwest.com/mortgages/news-and-articles/first-time-buyer-stamp-duty.html#:~:text=be%20aware%20of.-,Do%20first%20time%20buyers%20pay%20stamp%20duty%3F,to%20the%20government%27s%20relief%20scheme.&text=You%20only%20pay%20tax%20on%20the%20amount%20above%20the%20threshold.

Guide to first time buyer stamp duty

First time buyers will need to pay stamp duty if the purchase price of their property is above the threshold of £425,000. Find out more for first time buyers.

https://www.natwest.com/mortgages/news-and-articles/first-time-buyer-stamp-duty.html#:~:text=be%20aware%20of.-,Do%20first%20time%20buyers%20pay%20stamp%20duty%3F,to%20the%20government%27s%20relief%20scheme.&text=You%20only%20pay%20tax%20on%20the%20amount%20above%20the%20threshold.

CeciliaMars · 28/12/2023 10:41

It seems you believe in paying tax except for when you actually have to pay it...

Ireolu · 28/12/2023 12:07

My BIL and his wife were in this position. They bought outright but he already had property. They shared family money so I don't think there was a need to gift anything but the house they were buying is in her name only. Lawyer advised, think it was generally workable because they are married?.

Harvey100522 · 29/12/2023 14:02

This reply has been deleted

This has been deleted by MNHQ for breaking our Talk Guidelines.

RubySundayy · 29/12/2023 14:04

Just pay the stamp duty - it will be less than you
think.

If you add him later you’ll have to pay stamp duty on his share and incur solicitor’s fees to sort that out. Not worth the hassle and you may not end up better off

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