Q In 2019 I bought a flat in my sole name. My boyfriend – who is a first-time buyer - and I would like to buy a house together in the near future. Is it right that we won’t be able to qualify for the zero stamp duty rate? Would he be able to use any of the bonus he has earned on his help to buy Isa?
Ideally I’d like to keep my flat and rent it out but what is the best option cost-wise: sell my flat, or keep it when it comes to buying the house together?
AR
A How much stamp duty you will need to pay will depend on when you can complete a purchase and whether you do keep your flat.
If you do not keep your flat, and in the unlikely event that you manage to buy somewhere before 30 June 2021 – which is the new deadline for the £500,000 stamp duty land tax (SDLT) holiday in England and Northern Ireland, you will pay nothing if the property costs up to that value.
Between 30 June 2021 and 30 September 2021 there will be zero SDLT on the first £250,000 of the purchase price and then after the end of September, the first £125,000. Again, the £250,000 threshold applies just in England and Northern Ireland.
You don’t have to be first-time buyers to benefit from those rules.
But from July first-time buyers will be able to claim relief on the first £300,000 of a property costing up to £500,000. This relief doesn’t apply to joint purchases unless all or both the joint purchasers are first-time buyers. So you and your boyfriend wouldn’t be able to take advantage of it.
If you do keep your flat and buy another property with your boyfriend, you’ll have to pay the 3% SDLT surcharge on the purchase price of the new property. Your boyfriend can, however, use the government bonus from his help-to-buy Isa (no longer available) to put towards the deposit on your joint home provided it doesn’t cost more than £250,000 outside London but £450,000 inside the capital.
Whether keeping your flat as a buy-to-let is an option depends on whether a mortgage lender thinks you can afford to run two loans. You will certainly be able to afford to spend more on a joint property if you sell up.
This article was amended on 8 March 2021 to add information about additional properties attracting a 3% surcharge on top of normal stamp duty rates.
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