I own a property valued at £410,000 in my sole name. I have recently married and am in the process of remortgaging my property to get a better deal. To secure the best deal I need my wife’s salary to be taken into account by the Lender and I intend to transfer the property into our joint names as this will be a requirement of any mortgage in our joint names. My existing mortgage is £295,000 and I am looking to borrow precisely the same amount from the new Lender. I am astounded to find out that my Solicitors have advised that Stamp Duty will be payable on the transfer into our joint names, why is this?
Stamp Duty Land Tax is payable on any consideration payable for an interest in land.
While no money is actually changing hands in this example, there is a substantial consideration being made by your new wife. At the present time the property is in your sole name with you being solely liable for the existing mortgage. What is being proposed is that the new mortgage, albeit for the same amount, will be the responsibility of both of you and in respect of which the property is being transferred into your joint names.
In other words, your wife is receiving one half of your property in return for her becoming liable for one half of the mortgage debt (despite the fact that you will both be jointly and severally liable for the debt in any event). In this instance there is effectively a consideration made by your wife of one half of the mortgage debt in return for her receiving a one half interest in your property.
Sadly, in your case, as your mortgage is substantial, one half of the mortgage debt amounts to £147,500, which is in excess of the Stamp Duty threshold of £125,000 and, accordingly, a Stamp Duty charge of 1% of the consideration (£1,475) will be payable