Younger relatives of ours would like to move to our area but it's quite expensive - they can only really afford half of a house deposit. We've just come into enough money to make that up to a full deposit. They're first time buyers; we already have a house.

One idea is that we could give them the cash to make up their deposit, and then they pay the mortgage, but they get to live in the house; when it was sold, we'd split it 50-50. If we were to buy a house with them like this, would they still get the government's support for first time buyers? Would we get penalised as second home owners? Is it a good deal for either of us, and what are the alternatives?

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    What would you split 50 / 50 – the entire proceeds of the sale, or any increase in the property value? Would you also be paying 50 / 50 for the costs of Stamp Duty, surveys, conveyancing etc.? Commented Feb 8, 2016 at 9:29

1 Answer 1


Not sure why the downvote - seems like a fair question to me. Who owns a house and in what proportions can be totally separate from who is named on the mortgage.

There are two ways to do this - one way would be for you loan them the money first under a separate contract, which you should have a solicitor draw up; then they buy the house themselves. The contract would state the terms for repayment of the loan, which could be e.g. no repayment due until the sale of the house at which point the original amount is returned plus interest equivalent to the growth in value of the house between purchase and sale (or whatever). You'd need to be clear about what happened if the house lost value or they ended up in a negative equity situation.

The other option is where you are directly a party to the purchase of the house and are named as part owners on the deeds. Again the solicitor who is handling the house purchase for them would help with the paperwork.

In either case you would need to clear this arrangement with the mortgage company to make sure they were OK with it.

To answer your specific questions in order: - Yes, they would still be eligible for the Help To Buy ISAs (assuming that is what you are referring to) even though you would not be
- I'm not sure what "penalty" you are referring to. You'd have to pay tax on any income or capital gain you made from the deal.
- No-one can say whether this is a good deal for you without knowing a great deal more about your individual circumstances (and even then, any such advice you would get on here is worth as much as you pay for it.... if in doubt, consult an IFA.)

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    I believe the penalty Simon is referring to is the 3% Stamp Duty Land Tax surcharge for additional residential property purchases from 1 April 2016 (have suggested an edit to the question to make that clearer) Commented Feb 8, 2016 at 9:31
  • Yep, that's it. In the first scenario, do you know what would determine whether I'd pay income tax or stamp duty when they sold the house?
    – Simon
    Commented Feb 10, 2016 at 7:24
  • The 3% SDLT surcharge would be payable when they BUY the house, not when they sell it. I believe that if you went with my first scenario above (so you didn't actually own the house at all) then the SDLT would not apply and the loan repayment would be taxed as income; however if you were a direct party to the purchase then you would pay the SDLT surcharge at purchase, and any profit at time of sale would be subject to CGT. However I am not a lawyer or a tax adviser and I strongly recommend you get properly qualified advice if you are considering this.
    – Vicky
    Commented Feb 10, 2016 at 10:17
  • @Simon - Vicky is right that you pay the SDLT on purchase. I would just add that the 3% SDLT surcharge would not be payable if your share of the house is less than £40000.
    – nsandersen
    Commented Mar 22, 2016 at 15:31

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