Our son is hoping to go to university in September. Rather than pay rent for four or five years, we thought it sensible to buy a property that he can live in and sublet one or two rooms to fellow students. He will be able to raise a deposit but the bank has said he can't get a buy-to-let mortgage in his own name as he will have no income (they won't count rental income); so we would, effectively, have to buy it for him and gift it to him when he starts working. What is the best way to minimise the tax he would have to pay when the property is transferred to him?
Arthur Weller replies:
I appreciate that you are restricted by the rules imposed by the bank, but it would be best if your son could buy the property directly from the seller. Perhaps try convincing the bank that you will act as a guarantor for your son's mortgage? It may mean shopping around for the best mortgage deal. If that doesn't work, see if you can fit into the scenario described in the example in HMRC’s Stamp Duty Land Tax manual at SDLTM09785.