Stamp duty on second home

[Pegs11]

Hi, I’ve been trying to find the answer to this online, have looked at all the examples on HMRC website but cannot find the answer I need:

Person A wants to buy a property jointly with person B, to live in as their main residence. They are together, but are not married. Person A does not own any other property. Person B already owns a property, which they currently live in but plan to rent out.

I understand from the HMRC website that because one of the parties (person B) is already a home owner, the higher rate SDLT will be applied to the property they will be jointly buying. But my question is, will the higher rate SDLT apply to the entire property, or just to the portion owned by person B? So, if the property they are jointly buying is worth £600k, and they each have a £300k share in that property, will the higher rate be applied only to £300k, or will it be applied to the entire £600k?

Whole thing

Dammit.

Yeah it’s the whole amount. It would probably be best selling the current property given the price of the one you want to buy is a lot so the stamp duty will be steep.

Agree with it being the whole amount.

I would add that being a landlord these days is not for the feint of heart. If the property you plan to rent out has a mortgage, make sure you have at least a year's mortgage payments in the bank. If you have a difficult tenant, it can take over a year to get them out, during which time you may not receive any rent.

as A and B are not married example 2 exactly covers your scenario
SDLTM09810 - SDLT - higher rates for additional dwellings: Condition D - further examples - HMRC internal manual - GOV.UK

this is categorically covered in the introduction to joint purchasers: "Where a transaction is entered into by joint purchasers, the higher rates will apply if the transaction would be a higher rates transaction for any of the purchasers considered individually."

SDLTM09764 - SDLT - higher rates for additional dwellings: joint purchasers - Para 2(3) Sch 4ZA FA2003 - HMRC internal manual - GOV.UK

because person B is going from owning one property to owning two properties the additional rate (aka "higher" rate) SDLT will apply to the entire purchase price

In technical terms, for the higher rate NOT to apply then both of the new owners must fail one or more of the conditions A - D considered as individual persons:
SDLTM09765 - SDLT - higher rates for additional dwellings: Individuals – summary of Conditions - purchase of a single dwelling - Para 3(1) Sch 4ZA FA2003 - HMRC internal manual - GOV.UK

A) the new property "costs" more than 40k (ie chargeable consideration paid
B) the new property is not subject to a lease with at least 21 years still to go on it
C) the new owner continues to own an existing property (itself worth more than 40k) after having purchased the additional property
SDLTM09764 - SDLT - higher rates for additional dwellings: joint purchasers - Para 2(3) Sch 4ZA FA2003 - HMRC internal manual - GOV.UK
D) the new property is the new main residence, but the old main residence has NOT been sold within the allowed for time limit of 3 years

SO.....
If B sells their ex main residence within 3 years of the completion date of the purchase of the new property, then B would be deemed to have "replaced" their main home and so would be entitled to a refund of the additional rate SDLT paid. Whether B chooses to share that refund with A is matter between themselves...

ugh, only allowed to edit a post once, then it becomes locked ! :(

given we assume A and B do not currently live together, please remove the word "exactly" from the sentence "as A and B are not married example 2 covers your scenario"
That example nonetheless deals with the principle around continuing to own current property individually but buying a new one as co-owners.

@Wot23 thank you for interpreting the HMRC info for me! I think the SDLT would probably make the purchase of the second property too expensive in this case. Good to know.

@HappiestSleeping thank you for your reply, and I take on board what you say about the pitfalls of being a landlord!