Helping children to buy homes

The 3% stamp duty surcharge on the purchase of second homes which was introduced in April 2016 has posed a problem for parents wanting to help their children onto the housing ladder by buying in joint names. However, some enterprising lenders have devised plans which avoid the problem. These plans are called joint borrower sole […]

Stamp duty exemption

Stamp duty land tax is payable on the purchase of residential property at escalating rates. The first £125,000 of value is exempt from tax, but the next £125,000 is taxed at 2%. The rate then continues to rise until it reaches 12% on purchase prices in excess of £1.5 million. However, relief is available to […]

Unmarried couples’ pensions

Civil partners, like married couples, can inherit each other’s pension rights, but unmarried couples cannot. This perceived discrimination against opposite-sex cohabiting couples is being addressed in a Bill currently before Parliament which seeks to allow such couples to register as civil partnerships. The major effect would relate to rights under occupational and public sector pension […]

The work/ life balance

An American reporter, visiting the Soviet Union after the Russian Revolution in 1919, wrote “I have seen the future and it works”. The Calvinist Chancellor and Prime Minister Gordon Brown adapted the quotation to his own view of life, saying “I have seen the future, and it is work”. The economic advantages of working after […]

Trustees’ liability

It is flattering to be invited to become a trustee of a charity, but the role does entail responsibilities – and potential liability. Some charities are incorporated, like limited companies, and others are not. In the same way as shareholders in limited companies, trustees of incorporated charities are not personally responsible for any of the […]

Employee Share Schemes

More than 10,000 UK companies offer share incentive schemes to their employees which benefit from government tax concessions. There are four types of scheme: Save-As-You-Earn (SAYE); Share Incentive Plans (SIPs); Company Share Option Plans (CSOPs); and Enterprise Management Incentives (EMIs). SAYE schemes allow employees to invest up to £500 per month over a period of […]

The march of the robots

Most people’s perception of a robot is a replica of a human being on the lines of Star Wars’ R2-D2. But the reality is rather different. Robotics – the name given to this field of development – has been defined as “a branch of engineering which overlaps with electronics, computer science, artificial intelligence, mechatronics, nanotechnology […]

Payment Protection Insurance

Many people signing up for credit cards or loans have, sometimes unwittingly, also signed up for Payment Protection Insurance. This ensures repayment if the policyholder becomes unable to satisfy their liability on account, for example, of death, disability, loss of employment or illness. Claims have been rife from people who are unhappy to find that […]

Long Term Care dilemma

Care home chains are in trouble. Demand for places is increasing with longevity and the rising number of cases of dementia, but funding is predominantly dependent on Local Authorities, whose own stretched resources are limiting their ability to pay and leading to their demanding places at below their cost price. In consequence, care homes are […]

Hammond favours pensions

The previous Chancellor, George Osborne, reduced the annual and lifetime allowances for pension savings and at the same time increased the allowance for Individual Savings Accounts (‘ISAs’). This led many to assume that he intended that in the long term ISAs should become the principal means of saving for retirement. This would have reduced the […]

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Helping children to buy homes

The 3% stamp duty surcharge on the purchase of second homes which was introduced in April 2016 has posed a problem for parents wanting to help their children onto the housing ladder by buying in joint names. However, some enterprising lenders have devised plans which avoid the problem.

These plans are called joint borrower sole proprietor (‘JBSP’) mortgages and allow parents to share in the financing of the purchase without becoming part owners of the property and thereby incurring the second home charge.

This would enable a buyer whose income did not justify the level ofmortgage required, to involve a parent with a higher income to meet the lender’s income multiple requirement.

Another consideration is capital gains tax, which would be payable on the increase in value of a second home. This is avoided by keeping the name of the parent off the title deeds. The separation of ownership from financing also enables the first-time buyer to qualify for the £300,000 stamp duty exemption, which would not be available if the purchase were in joint names.

JBSP is available from a limited number of lenders and the criteria are strict. There must be a direct family connection between the buyer and the joint mortgagor, and the buyer’s income prospects must be sufficient to enable them ultimately to afford the mortgage on their own.

An alternative scheme offered by one lender allows a borrower a 100% loan subject to a family member providing a 10% deposit.