transfer of flat ownership

[getpooh]

A relative is going to give me their flat; ex council and purchased over 3 years ago. There is a mortgage on the property oustanding which I have been paying since the start. It's value is about �120,000 so there will be no stamp duty. They are willing to give the property to me for free as a gift. Can this be done and is it subject to tax? Or do I have to buy it for a �1. How do I go about it? Can a name be changed on a mortgage and how do I do this?

Pooh

[steve2010]

you cant just do it as you want,for a start if the flat is sold or given to you,the original mortgage has to be repaid first, so you have to find �120k,you just cant take over somone elses mortgage,you wont be able to change the deeds as the original lender wont allow it,its a very complicated affair,it would be better if you consulted a solicitor.

[getpooh]

With regard to the mortgage only �70k is left to pay and I have been the official guarantor of the mortgage for its whole term. I am therefore known to the bank; even if for some reason in the future I did default they are in a win win situation as the property is worth �120k.

As to the 5 year 'right to buy' change I am under the impression that as it was purchased prior to the change in law the 3 year policy is stall valid as in the contract at the time. I am trying to confirm this as it is very rare for any law to be retrospective.

[Ethel]

If she applied for the right to buy before 18th January 2005 it can be sold without penatly after three years only.

This flat was obviously bought before then, so you don't have the problems 'in a pickle' refers to.

Both you and your relative need to speak to the mortgage company in the first instance, or you need to get a mortgage in your own right for the amount outstanding from another company.

If your relative is 'elderly' there could be all sorts of future problems if she can be deemed to have disposed of her assets.

You need to get proper legal advice.

[getpooh]

Thanks for the info folks. I have been in contact with the bank and am looking for a solicitor. The relative is young, fit and healthy so there will be no probs there. Obviously relations encounter this situation sometimes. There must be some simple way of transfering property ownership and changing names on a mortgage via a solocitor with a fee to pay. This is the part I have no idea of how to do. This must normally occur in older people trying to evade inheritance tax but without the mortgage hassle.

[steve2010]

as i said you cannot just change the name on a existing mortgage,you will have to take out a new one and pay off the old one,as you are known to the bank they should be of help to you.

[getpooh]

Thanks Steve
Anyone know the tax position on this i.e. capital gains/ income? If possible the flat will be given to me as a gift. If I have to pay it would be a nominal fee of �1. Obviously I will have the mortgage to continue for many years. I will use the place as my own home. In the future I may sell or rent but not for some years as I like the place myself.

[Ethel]

It will not be a gift if you are taking over the mortgage in your own right.

You will be buying it - at a reduced value, maybe, but it can not be considered a gift.

Don't worry about capital gains tax at the moment - that won't need to be considered for a long time. One thing at a time.

What you are actually doing is buying the flat off your relative, with a mortgage. It's as simple as that.

[steve2010]

you are not listening to us are you,you cannot just take over your relatives mortgage and pay it ,the flat will still be in their name and you will have no legal right to it,say you fall out with them in time and take it back,you will be in trouble then,go to a solicitor and do it properly.

[Nether Edge]

Summary:
1. Not "gift". You would need legal Transfer of ownership, to be registered at HM Land Registry.
2. Mortgagee (lender) may permit you to take over account, by "Transfer of Equity" or by remortgage.
3. Otherwise, you'd have to finance purchase by mortgaging property to another mortgagee.
4. No Stamp Duty Land Tax- stamp duty itself was abolished three years ago.
5. Ethel's comments seem accurate.
6. These posts assume property in England/Wales. Different laws apply in Scotland and elsewhere.
7. Take legal advice. Don't just rely on this forum.