Q My wife and I are both about 50. When we met 20-plus years ago she had already bought a house which I moved into. We have decided now that we want to move and have started looking for property.
My questions are: am I classed as a first-time buyer, having never been named on a mortgage or deeds, and would I be able to start a help-to-buy Isa to save a bit of the conveyancing fees?
Would I also be eligible for first-time buyer stamp duty relief? We are looking at properties less than £500,000 and the intention is for me to be the sole name on the mortgage. We are currently mortgage free. If the answer to this is tied to us already living in a property that we own, would the answer change if we sold our current property and moved into rental before buying?
MD
A In the words of HM Revenue and Customs (HMRC), ‘“to count as a first-time buyer, a purchaser must not, either alone or with others, have previously acquired a major interest in a dwelling or an equivalent interest in land situated anywhere in the world”. So, as long as you have never owned property, that makes you a first-time buyer but definitely not your wife. As a first-time buyer, you would be eligible to take out a help-to-buy Isa which earns you a government bonus of 25% on savings of up to £12,000. However, the money in a help-to-buy Isa can’t be used to pay your conveyancing fees as your savings and government bonus can be used only to fund your cash deposit on a property. In addition, you will qualify for the government bonus only if you buy somewhere costing £250,000 or less or £450,000 if the property is in London.
As far as tamp duty land tax (SDLT) goes, if one of the joint buyers of a property has owned a home before, no first-time buyer SDLT relief is available even if the other buyer has first-time buyer status. To qualify for zero-rated SDLT – on the first £300,000 of the purchase of a property and then 5% on the remainder up to £500,000 – you would have to buy in your sole name. However, if your wife is making any contribution to the purchase of your new home, she would be ill-advised to agree to anything but joint ownership of it.
It is worth noting that if you don’t sell your current home before buying the new property – even if it’s in your sole name – you’ll have to pay the higher rate of SDLT (standard rate plus three percentage points) on the purchase price.
Selling and moving into a rental property before buying would avoid paying the higher rates of SDLT but would make no difference to whether or not you qualify for first-time buyer relief.
