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Why must I pay Stamp Duty to re-mortgage my property?

I own a property valued at £410,000.00 in my sole name.  I have recently married and am in the process of re-mortgaging 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 £295,000.00 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 your 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 (£1,475.00) will be payable.

* Emyr Pierce is Managing Director of Emyr Pierce Solicitors in Rhiwbina, Cardiff, Western Mail Conveyancer of the Year, specialising in Domestic and Commercial Property. Contact www.emyrpierce.co.uk or email law@emyrpierce.co.uk

Getting out of a joint mortgage

My daughter is in a joint mortgage with a friend she has now fallen out with and wants to sever the connection. The mortgage contract still has another two years to run. Is there any way she can end it early without incurring any expensive penalties?

The likelihood is that the two of them will have bought the house with a Fixed Rate or Tracker mortgage – with penalties for early repayment. Your daughter can only sever the connection by either transferring her interest to the former friend, or a third party who may want to become a joint owner. Or, the former friend could transfer her interest to your daughter, known as a Transfer of Equity.

No alteration to the current arrangements will be possible until the mortgage company has agreed to any transfer. If only one owner is to remain, the lender will need to be satisfied with the earning potential of that sole remaining owner – before releasing the outgoing party. If the house has to be sold then an early repayment penalty may be incurred. Most lenders will not charge an early repayment penalty on a Transfer of Equity, but check first as any penalties can be substantial.