Q I bought my house in June 2019, before I met my partner. When I met him, he was looking to buy a house and did so about 12 months later in late January 2021. He lived in the property for about six months before moving in with me in early August 2021. He started renting out his house the following month and got permission to let from his mortgage company.
At this point, he changed his address, moved all of his possessions and furniture in with me and since October 2021, has contributed monthly to the mortgage and bills for the house. He is registered to vote at this address, his car insurance is registered to this address and he is registered with a local GP. Although his name has never been on the deeds or mortgage we have treated the house as though it was both of our main residence. The house that he rents out contains none of his personal items or possessions and he plans to continue renting this house out long term.
We are now in the process of selling my house and purchasing a home together. My partner will continue to own his house that he rents out, but has no plans to live there again. Should we pay the higher rate of stamp duty when we buy the house together, or does this situation qualify as replacing one main residence with another?
A Looking at an example in HM Revenue and Customs’ online stamp duty land tax (SDLT) manual, it seems that you will have to pay the higher rate of SDLT on the home you buy together. If you imagine that you are Ms B and your partner is Mr P, you will find that the example describes your situation exactly: “Mr P and Ms B, who are not married to one another, each own a residential property, with neither having any interest in the other’s property. They both live in the property owned by Ms B; the property owned by Mr P is rented out. Ms B is selling her property and they are jointly purchasing a new one, which will be their new main residence. Mr P will retain his rented-out property.”
The guidance goes on to say that your situation does not qualify as replacing one main residence with another so “the transaction is a higher rates transaction”.
It would be a completely different story if you were married or in a civil partnership. The higher rates do not apply to a joint purchase of a new main residence where a married couple both own property but have lived together in one of the properties as their main residence. Both parties – unlike Ms B and Mr P – count as replacing a main residence but only because they are married.