Joint Borrower Sole Proprietor Mortgage Stamp Duty: Essential Guide
The Ultimate guide to Joint Borrower Sole Proprietor Mortgage Stamp Duty.
Article Written: 24/04/2023
What is joint borrower sole proprietor mortgage stamp duty?
When it comes to buying property in the UK, there are a variety of costs to consider. One of these costs is stamp duty, which is a tax that must be paid on most property purchases. If you are considering buying property as a joint borrower sole proprietor, you may be wondering how stamp duty works in this situation. In this article we will go through everything joint mortgage sole proprietor stamp duty related, and it is for informative purposes only. If you wish to seek advice on stamp duty, you should get in touch with your solicitor or tax advisor.
What does joint borrower sole proprietor mean?
Firstly, it’s important to understand what is meant by “joint borrower sole proprietor”. This is a type of mortgage where two or more people borrow money to buy a property together, but only one person is named on the property deeds as the owner. This can be useful if one person has a higher income or credit score, as it may allow you to borrow more money or secure a better interest rate.
How does joint borrower sole proprietor mortgage stamp duty work?
A Joint Borrower Sole Proprietor (JBSP) Mortgage usually has people attached to the mortgage who are not on the deeds of ownership. This can therefore mean that those people may not be liable for stamp duty.
With a standard purchase, if either person was not a first time buyer, then you may find that you do not get the stamp duty relief that a First time buyer is eligible for. However, with a joint borrower sole proprietor mortgage stamp duty is usually only calculated based on the person buying the property, not anyone on the mortgage for affordability purposes.
What is Stamp Duty and How Does it Apply to Mortgages?
Stamp duty is the tax that is paid to the government when you buy a property. Usually all people that are on the deeds of a property are on the mortgage. However, with Joint Borrower sole proprietor you have the situation where people are on the mortgage, but do not own the property.
Because the non-proprietor is not purchasing a property, they will usually not be liable for any stamp duty on the property. This can therefore be beneficial, as a first time buyer wouldn’t lose their stamp duty relief.
How to Calculate Stamp Duty for Joint Borrower Sole Proprietor Mortgages
In general, stamp duty is calculated in the normal way for Joint borrower sole proprietor mortgages. However, you usually only calculate it based on the homeowner, not everyone on the mortgage.
You can use the charts below, or the government website’s calculator to calculate your stamp duty liability, however we recommend speaking to a solicitor or a tax advisor to get an accurate figure.
Stamp Duty Changes in 2023: What You Need to Know
Recently the government raised the stamp duty thresholds. You can see this in the chart below. This has been particularly helpful for first time buyers who now have a significant stamp duty land tax free allowance.
This has been long overdue with rising house prices, and many first time buyers will be pleased with the changes. On top of this they also raised the stamp duty land tax free allowance for non first time buyers. This therefore means that home movers will often pay less stamp duty now as well.
If you want to know more about stamp duty land tax we highly recommend discussing it with a tax advisor, solicitor or checking the government’s calculator.
Stamp Duty for Second Homes
When considering a joint borrower sole proprietor (jbsp) mortgage, many are concerned they will have to pay additional stamp duty for a second home. However, this is often not the case, as the joint borrower (Non-proprietor) on the mortgage will usually not be eligible for stamp duty as they will not be on the deeds of the property.
Stamp Duty charts
Throughout this article we have mentioned the different rates of stamp duty. The 2 charts below explain stamp duty land tax. These generally apply to the homeowner for joint borrower sole proprietor stamp duty.
Standard Stamp Duty Chart
Up to £250,000 | Zero |
The next £675,000 (Up to £925,000) | 5% |
The next £575,000 (Up to £1.5m) | 10% |
The remaining amount (Anything above £1.5m) | 12% |
Example
In October 2022 you buy a house for £295,000. The SDLT you owe will be calculated as follows:
- 0% on the first £250,000 = £0
- 5% on the final £45,000 = £2,250
- total SDLT = £2,250
First Time Buyer Stamp Duty Chart
Up to £425,000 | Zero |
The next £500,000 (Up to £925,000) | 5% |
The next £575,000 (Up to £1.5m) | 10% |
The remaining amount (Anything above £1.5m) | 12% |
Example
You are a first-time buyer and purchase a property for £500,000. The SDLT you owe will be calculated as:
- 0% on the first £425,000 = £0
- 5% on the remaining £75,000 = £3,750
- total SDLT = £3,750
Second homes additional rate
There is usually an additional rate for second homes which doesn’t often apply to Joint Borrower sole proprietor stamp duty. This is because it is rare for the homeowner on a joint borrower sole proprietor mortgage to be buying a second home.
However, if you are buying a second home there will normally be an additional 3% stamp duty land tax on properties
Joint Borrower Sole Proprietor Mortgage Stamp Duty: Conclusion
When considering a Joint Borrower sole proprietor (JBSP) mortgage, you can usually calculate the stamp duty as if you were buying a standard property. You usually just ignore the non-homeowner. This is because they will not own the property, and are usually on the mortgage for affordability purposes.
You should always seek advice from a professional before undertaking a joint borrower sole proprietor mortgage, and a solicitor may be able to advise you on stamp duty liabilities.
Got a question about Joint Borrower Sole Proprietor Mortgage stamp duty that we haven’t answered? Get in touch.
The information contained within was correct at the time of publication but is subject to change