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Alex J.
Alex J., Solicitor
Category: Property Law
Satisfied Customers: 3665
Experience:  Two years conveyancing experience.
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I have provided a loan to someone and I have a charge on their

Customer Question

I have provided a loan to someone and I have a charge on their residential property which amounts to more or less what the property is worth. If they default and I reposes the property will I need to pay stamp duty on it if I keep it ? or sell it ?
Submitted: 2 years ago.
Category: Property Law
Expert:  Alex J. replied 2 years ago.
Alex J. :

, Thank you question and welcome. My name is ***** ***** I will assist you. If your loan is less than the value of the property, you will have to obtain an order and account to the debtor additional sums left once your loan is repaid.

Alex J. :

If you repossess the property as a mortgagee in possession you wont incur an SDLT charges as there will not be a transfer of value.

Alex J. :

I look forward to hearing from you.
Kind regards AJ

JACUSTOMER-7lh7mgyv- :

Aj

JACUSTOMER-7lh7mgyv- :

Ok so am i a mortgagee in possession then ?

JACUSTOMER-7lh7mgyv- :

??

JACUSTOMER-7lh7mgyv- :

Can you tell me what is happening ??

JACUSTOMER-7lh7mgyv- :

I am totally confused now with all this

JACUSTOMER-7lh7mgyv- :

why are you not coming back to me ??

JACUSTOMER-7lh7mgyv- :

Can you call me on *********** /p>

Alex J. :

, Thank you. I am here, I will go on and off line so please do not be concerned if you do not hear from me right away.

Alex J. :

Do you have a possession order?

Alex J. :

Is your loan greater or less than the value of the property?

JACUSTOMER-7lh7mgyv- :

no not yet and the mortgage is probably greater than the value of property

Alex J. : Thank you. The problem is you cannot be certain of that until the property is sold so if you intend on keeping the property I would recommend that this is done with the consent of the debtor. They agree the property can be kept in full settlement of the debt. Otherwise they could always argue that the property may have surplus funds in it. Kind regards AJ
JACUSTOMER-7lh7mgyv- :

Ok si if I get the debtor to agree does that make me a mortgagee in possession and I does that mean I pay no stamp duty?

Alex J. : thank you. The debtors agreement does not mean you do not pay stamp duty it is up to HMRC to say whether you fall under the Mortgagee in Possession. You need the debtor to confirm that they are happy to take the whole property in settlement of the debt. Otherwise there is a risk the debtor could force you to sell the property.
Alex J. : Kind regards AJ
JACUSTOMER-7lh7mgyv- :

So i understand once I take back the property with the debtors agreement you say but it is not clear if sdlt is payable I will need to get clearance from hmrc ? But if I am holding the property how does hmrc know ? Why is it not clear cut

JACUSTOMER-7lh7mgyv- :

How does one know if one is mortgagee in possession ?

JACUSTOMER-7lh7mgyv- :

You said at the beginning if I repossess the property as mortgage in possession I won't incur sdlt ? But now you are saying I would need hmrc to tell me if that is the case ?

Alex J. :

, Thank you. You will be a mortgagee in possession as you will have taken a charge over a property and then applied possession order. You can then use the possession to register a transfer of the property title into your name at the land registry.

Alex J. :

Being a mortgagee in possession is a transfer that is exempt from an SDLT charge.

Alex J. :

As HMRC are responsible with collecting this tax and your solicitor will register the transfer, it would be prudent in any regard to have HMRC confirm that they will not be charge SDLT on the transfer as it is exempt. Kind regards AJ

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