The increase in the stamp duty charge for second homes is not only posing potential problems for buy to let landlords and second home buyers but could have implications for couples going through a divorce or separation. In what is undoubtedly a traumatic time in someone’s life, partners looking for a new place to live are facing the liability of having to pay that extra tax as it’s deemed they have a second home. It is one aspect of the 3 point increase in stamp duty for second homes that doesn’t seem to have been taken into account.
The problem is more acute for lower income couples where one person stays in the marital home because they need a safe and secure place to bring up their children. The partner who then moves out, essentially is in the position where they are for all legal purposes buying a second home and subject to that extra stamp duty which can add thousands to the cost.
As the process works at the moment, the first home needs to be sold within 3 years to avoid paying the stamp duty but it’s often the case that one person remains in the marital home and the leaving partner is still paying on the mortgage. This could certainly affect women more disproportionately if they have no stake in the initial marital home and then go through a divorce and have to move out.
For couples buying their first home, the landscape of raising money for the deposit and getting a mortgage in the first place has also changed considerably over the years. It’s more likely nowadays that finances will be raised from multiple sources and from both partners, something which they often enter into without any legal protection, essentially trusting each other that things will work out. If a divorce does occur, the lack of any legal foundation which protects the relative contribution of each individual can cause problems in addition to the impact of stamp duty costs when trying to buy a new property.
Particularly if parents have been involved in providing the financial backing to purchase the initial property, there can be real concern once a divorce gets underway. If the property is not divided equally then it can cause problems with one partner getting much less than they believed they were due considering the amount that was put in.
One way to ameliorate this when purchasing a house is by putting in place the right legal protections. While this may not seem appropriate when you first set up home together, thinking about what happens if the relationship does not last is important. Introducing declarations of trust can help solve this problem and make things less complicated and less antagonistic if the marriage or partnership does eventually fail.
When you are looking to buy a home, getting the right legal advice is critical if you want to plan properly for the future. A conveyancing solicitor can give you the guidance you need to make critical decisions and look towards all the future possibilities. While the stamp duty issue remains a real concern, being aware of the problems that can arise outside of this can allow you to be more prepared and plan in an effective way.