Liable for 3% 'second home' SDLT kicker?

That's interesting.

One of my reasons for liking some YBS mortgages it because they allow up to 99.9% overpayments. I like to take advantage of over-payments. Some NatWest mortgages I have are limited to 10% and I have found that limiting. I am just waiting for the reset to happen so I can load it a little more. I always encourage people to overpay whatever they can, whenever they can.

She's decided to pay the extra SDLT. I think she wants a simple life. And this will allow her to move (as in the process) quicker. I see the sense behind that decision.

If this becomes her only property within three years of completion, she can reclaim the excess 3% SDLT loading that she paid.

Thank you for this positive insight.

May I enquire about the specifics of this situation and you answer "yes" or "no"?

Person A and Person B (sisters) bought a property together last year because Person B would not meet the affordability criteria on her own. Person A had only supported Person B with a deposit contribution, in reality, but I think we all will know that the Lender will have taken incomes into account. That is probably a naughty thing, but the fact is that Person A has not been helping Person B with the mortgage payments. Nor has Person A actually been living there. It is her sister's home.

Now Person A would like to get her own place. They could initiate this Transfer of Equity but there might still be challenges with Person B meeting the criteria set out by the Lender. So they have decided to swallow the SDLT kicker and Person A will be considered a second home owner (strictly true).

Within 3 years, if Person B's situation materially changes (new job, better pay, overpayments etc.) and she could meet the affordability criteria at the time, and the removal of Person A from that mortgage and title deeds could go ahead, then would this hold true?

Could Person A transfer their interest in this existing property (Property A) to Person B at a nil consideration and then could Person A claim back the SDLT kicker on the property she'll be looking to buy (Property B)? Obviously, the HMLR website talks about "selling within 3 years", so clarity would be a really helpful thing here.

Person A is perfectly willing, and able, to pay the SDLT kicker now - but it'd be a great boon if there was even the chance of it being reclaimed later on.

On a £200,000 property (she's looking up to £250,000) the kicker will be £6,000, on £250,000 the kicker is £7,500. Not chicken-feed.

The end point would be where both Person A and Person B both have a single property - Property A and Property B respectively - but it would not be true right now and no future sale, per se, would take place - just a transfer of any legal interest.

---------- Post added 17-06-2017 at 06:58 ----------

Just to add that I had a really good off-line interaction with Danny_Boy and it's resulted in me connecting him and my friend together to look at potential next steps. All very helpful.

While I feel perfectly capable of navigating the mortgage market myself, this situation is a more complicated one than I'm used to dealing with and sometimes it pays to pay someone for their knowledge and experience (not that I'd be paying, but you get the idea).

Jeffrey will have the definitive answer, but from what I've read so long as the 'old' house is disposed of somehow (so an equity transfer with no cash sale) within that time period, the SDLT can be reclaimed.

Yes. The 3% excess SDLT levy applies to almost any purchase of residential property other than the purchaser's main house. If house2 is purchased before house1 is sold, the excess applies- but it can be recovered if house1 is sold within three years of house2 being purchased. See https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property