Transfer of Equity / SDLT question for a married couple?

[Mpoonshine]

Apologies if this has been asked before. I have not been able to find anything definitive so far.

My wife and I got married on 20/12/2005.

For our previous house, we had to get a mortgage in my name only and so the title deeds were also in my name only.

We then sold that house and bought our current house on 08/09/2006 (completion date). Again, due to mortgage which transferred to our new house, title deeds were also in my name only.

Everything to do with the finances are shared equally 50/50 between us eg funds for deposit, monthly mortgage payments bills etc. That was also the case with our previous house. But the issue / my current question never came up then as technically it was bought and later sold in my name only.

We are now remortgaging the house to a new lender, (same mortgage amount), but due to a change (for the better) of my wife’s income, and because she wants to be on the title deeds, we are remortgaging in both our names, so will have to do change the title deeds from my name only to both our names.

Presumably we won’t have to pay any SDLT at the same time as the transfer of equity. If we did, it would basically be govt theft. But as I say, I can’t find anything definitive yet. Can any one advise?

Many Thanks in advance.

[Mpoonshine]

As further clarification, the reason why our current mortgage (which we ported from the last house) and title deeds for both houses was in my name only was because when we applied for a joint mortgage we were declined, I think due to my wife’s credit rating at the time, so the only option was to get mortgage in my name only and therefore the title deeds were and are still in my name only as well.

Can anyone answer the question which as above post is:

Presumably we won’t have to pay any SDLT at the same time as the transfer of equity / remortage. If we did, it would basically be govt theft. But as I say, I can’t find anything definitive yet. Can any one advise?

[AvocadoK]

There is no SDLT on remortgaging.
SDLT applies to land transactions only, i.e. in general terms, buying and selling interests in property. There is no change in ownership in your property - you are just changing the way it is mortgaged, which is quite a different thing.

[King_Maker]

There is no SDLT on remortgaging.
SDLT applies to land transactions only, i.e. in general terms, buying and selling interests in property. There is no change in ownership in your property - you are just changing the way it is mortgaged, which is quite a different thing.

Prima facie, there is a change of ownership - the wife is to become a joint owner, if I have understood the OP correctly.

Assuming responsibility for 50% of the mortgage is "consideration" for SDLT. Whether any SDLT is payable will depend on the figures.

[maths]

Tend to agree with KM, as it appears that wife has initially no beneficial interest then following the remortgage acquires such an interest albeit encumbered with 50% of the mortgage ie a potential SDLT charge arises.

[AvocadoK]

Point taken.

A different tack might be to demonstrate that his interest in the property is held on trust for both. A declaration of trust could be made to that effect. This would seem to reflect the reality here, as wife has made a 50% financial contribution. Putting the wife's name on the title deeds does not then change the beneficial ownership, so there should be no SDLT charge.

[King_Maker]

Point taken.

A different tack might be to demonstrate that his interest in the property is held on trust for both. A declaration of trust could be made to that effect. This would seem to reflect the reality here, as wife has made a 50% financial contribution. Putting the wife's name on the title deeds does not then change the beneficial ownership, so there should be no SDLT charge.

Yes, that is a possible analysis to explore - hence my use of "prima facie".

[Mpoonshine]

Thanks for the comments.

If this declaration of trust could be used as you suggest it might be, yes that might bypass having to pay SDLT, which we already paid when we bought the property. But what about the new mortgage lender?

In that scenario, the property would remain technically in my name only, but wife (and her income etc) would be added to the mortgage.

Do mortgage lenders normally agree to this?

[King_Maker]

I would guess the new lender would require your wife to be a joint legal owner if her income was being taken into account - otherwise she would have nothing to mortgage.

Note that it's only her share (50%) of the mortgage which applies for SDLT. Therefore, the mortgage has to be more than £250,000 before any SDLT to become payable.

Your solicitor should be able to advise.

[section 44]

The question that you should ask: in equity, did your wife co-own the property?

Everything to do with the finances are shared equally 50/50 between us eg funds for deposit, monthly mortgage payments bills etc.

This is consistent with a positive answer but not exhaustive.