I was wondering if anyone had any experience of the changes to Stamp Duty and Mesher Orders?
A bit of background -
Last year the government imposed an additional 3% of the value of the property for people buying second homes. The idea being that the buy to let market is inflating house prices and making it harder for the rest of us to buy a house as a home. Tax after all is about 2 things;revenue generation but equally, shaping society. This is why we tax cigarettes and alcohol. I have to say, I am supportive of the law in principle.
I am divorced and my ex-wife and 2 older sons live in the Former Matrimonial home (FMH). When we went to court in 2013, a judge put a Mesher order in place. I will get 37.5% of the equity of the FMH in 6 years my second son is 18.
I am remarried and my new wife and we have a baby. We have had to pay expensive private rent and have been trying to save a deposit to buy our own place. We have finally scrapped it together and have found a place. However, I have now been told that I am liable to pay the additional 3% as I own a second home.
I have looked into this in some detail and there are lots of exemptions, all for people with buy to lets or the super rich. For example, if I owned 100 buy to let properties and could prove I am moving my main residence I would not have to pay the additional 3%.
Equally, if I owned a buy to let property and then got married we would not have to pay the additional 3%.
If I was just separated then it won't be a problem as long as I could prove that i have no intention of getting back with my ex Wife.
It seems ridiculous that there are exceptions that have been thought about for people who have additional properties to to rent out but not those that have Mesher orders! It is as if divorced fathers in this position have been overlooked and are being treated a property tycoons as a result. The law was introduced to impact on the buy to let market!
I am sure there a people in a worse position than me, in the sense that under the terms of their Mesher Order they might have been awarded a smaller % of the equity, some have been award as low as 20%. Yet, they would still be facing the additional 3% as someone adding to their buy to let portfolio and owning 100% of this new property.
This is something that will impact on thousands of father with Mesher Orders that are attempting to buy a home. It seems totally unfair. I don't believe for a minute that this was the governments intention. I think it is just bad policy making. I have no doubt that it will eventually be overturned but the problem is that it is so new that in the mean time people like me are going to lose out on a house as they can't afford the additional 3% stamp duty.
I would be grateful of any advice or comments. Has anyone had experience of this?
Who gave you the advice? If it's a property lawyer, then I suspect they know the rules to the letter - I suppose the advice is correct in that you do own a share in another property, however, it isn't your main residence, so it might be worth contacting Inland Revenue to see if they can clarify the rules.
I have spoken to a lawyer and a mortgage advisor. I have also seen articles in the paper about it. HMRC's current position means that people like me don't have an exemption. I am certain that this is an oversight. However it is the law currently. Unless people kick up a fuse about it, it won't change.