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Property issues for couples on separation

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About Claire

By Claire Fountain

Our conveyancing teams work closely with our Family Law team when it comes to advising or dealing with the family home. This may relate to the protection of rights where one party is not on the title of the family home, dealing with a transfer of equity or sale or advising on other aspects such as Stamp Duty Land Tax.

A transfer of any property subject to a mortgage will require the lender’s consent. It is common place these days for the mortgage lender to have a note entered on to the title which prohibits any transfer or dealing without their written consent. When a relationship breaks down it is important to find out what the lender will or will not agree to at the outset. The Family Proceedings Rules require a lender to be served with any Court application involving a property subject to a mortgage.

The Stamp Duty Land Tax (SDLT) rules are complex and often have an effect that a person was not expecting.  

For example, a married couple separate but do not embark on formal proceedings to end their marriage. The family home is in Mr A’s sole name which he is going to continue to retain. Mrs A decides to purchase a flat worth £250,000. Mrs A has never owned property registered in her name. Mrs A believes she is a first time buyer and can claim relief, meaning a SDLT bill of zero. She is mistaken. The Finance Act 2003 states that a purchaser will be liable to pay a surcharge on a purchase as her spouse would. Mrs A is “connected” to Mr A by virtue of marriage, therefore Mrs A would be liable to the higher rate which is a SDLT bill of £10,000.  

Further, if an interest in a property is held by a child under 18 (which necessarily has to be under a trust) then that interest is treated as if it were bought or held by the child’s parents which can also have adverse tax consequences on the parents sending them into the surcharged rate if they purchase a property and are not replacing their main residence.

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