Buying your first home or even moving into your dream property is often seen as one of life’s greatest milestones, and with the introduction of the Government’s Stamp Duty Land Tax Holiday, the residential property market appears to be strengthening, as people take advantage of the tax relief.
Following the property market slump in April and May this year due to the Covid-19 pandemic, the Government introduced a tax relief which is currently in effect up until April 2021 to try and boost the economy. The Stamp Duty Land Tax relief is available for residential property purchases up to £500,000.
Whilst purchasing a property is an exciting prospect, it is essential to consider putting in place legal safeguard measures to protect what might possibly be your most expensive purchase in your lifetime. Property is the largest asset for most people and can lead to complications and disputes unless the necessary measures are in place.
A survey carried out for Saga by Populus has found that 66% of their respondents confirmed they had already given or were intending to give substantial sums of money to grandchildren, many to support the purchase of a home.
Regardless of whether you are putting funds towards a property or purchasing a property with a spouse, a civil partner, a partner or family member it is essential to ensure, as far as possible, that the money you put into the property purchase is protected should the property need to be sold or transferred in the future.
Dangers arise when a property has been purchased by parties who have either entered into the purchase with differing amounts of capital; or family members have supported a purchase by investing capital, and then an unexpected relationship breakdown or death results in the funds passing to an unintended beneficiary and not back into the hands of the initial investor.
One way to protect the capital you are investing into a property, particularly if you are purchasing with someone else and you are both inputting different amounts of capital, is to consider putting in place a Declaration of Trust.
A Declaration of Trust is a legal document whereby the parties state and agree their financial contributions to the property, and the division of the asset, in advance. If a Declaration of Trust is in place and the property is sold or transferred in the future, the division of the asset has already been agreed, helping to avoid disputes, and protecting against loss of potentially significant sums of money.
There are a number of things to think about when purchasing a property and entering into a Declaration of Trust may seem unfamiliar, therefore, it is always important to seek legal advice before entering into a property purchase or a transfer of equity in an existing property so as to ensure the money you are putting forward is protected.
Barrett and Co Solicitors have two expert teams bridging residential conveyancing and Wills, Trusts and Powers of Attorney to guide you through the process to ensure you and your family are kept safe and protected. If you would like more information about purchasing a property, advice on putting a Will, a Declaration of Trust or a Lasting Power of Attorney in place please feel free to contact the team by telephoning 0118 985 9711 or by emailing [email protected].
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Juliette Spanner is an Associate of the Chartered Institute of Legal Executives and works in the Private Client department at Barrett & Co.
If you would like to get in touch with Juliette or have a question for her regarding her area of work, please email her at [email protected] or call her on 0118 958 9711.