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Antony Antoniou – Luxury Property Expert

We bought a house together and now they are refusing to sell

We bought a house together and now they are refusing to sell

We bought a house together and now they are refusing to sell

I bought a house with a friend, now I want to sell to buy with my partner and she won’t sell, what can I do? I am also worried about the capital gains tax implications if I move out and rent elsewhere, should that be a concern?

You are also right to query the capital gains tax implications. When you sell your main home (the one you live in), you are entitled to something called Principal Private Residence Relief (PPR), which should, in most cases, shield you from capital gains tax. However, by leaving the property and renting elsewhere you could lose this tax relief and potentially become subject to capital gains tax. It depends on how long you end up renting for and how much the property has increased in value since you purchased it.

On residential property, capital gains tax is currently charged at 18 per cent for basic rate taxpayers and 28 per cent for higher rate taxpayers. This is charged on any house price gains since purchase.

That said, everyone is entitled to an annual capital gains tax allowance, which currently means the first £12,300 of any realised gain is tax-free.

Hopefully, you will have signed a Declaration of Trust when you both purchased the property. This is a legally binding document which will show the financial arrangements and intentions agreed between you as joint property owners at the time of purchase. If you have written an exit clause into the Declaration of Trust, this can make things easier if a sale does need to be forced.

That legal document is evidence as to the nature of the so-called ‘trust of land’ when you bought the flat and will be the basis of your claim in law for the trust to come to an end, either by way of your co-owner buying you out or selling on the open market. The document may even set out how you would go about selling, or one person buying the other out. However, regardless of whether it includes such details, if your co-owner is not playing ball, you must formally write to him to ask him to either buy you out or sell the property, and give him a tight deadline to agree.

If she does not, and you want to assert your legal rights, the forum for that is the court. You would need to issue a claim under the Trusts of Land and Appointment of Trustees Act 1996, often called Tolata for short.

The short answer is that you cannot force the sale of a jointly owned property without an ‘order for sale’ from the Court.

If the property is owned as Tenants in Common, then you may be able to sell your share to a third party – or indeed your friend if they can secure a mortgage for your share. If the property is owned as joint tenants, you would first need to sever the joint tenancy and notify the Land Registry.

Forcing a sale, if it comes to it, will mean getting a court order. Going to court will typically be a long and drawn-out process and will require a solicitor to be involved.

When buying a property together, you have a choice over whether to register with the Land Registry as joint tenants or as tenants in common. As joint tenants, you will both own the property equally – there are no separate, identifiable shares. if one person were to die, the surviving owner would automatically receive the other’s ownership in the property.

As tenants in common, you each own separate identifiable shares in the property. These may be equal or unequal shares depending on what you decide.

Under this form of ownership, if one person were to die, their share in the property would pass to whoever they have chosen to inherit it in their will. You might prefer to opt to be tenants in common if contributing different amounts for the deposit or mortgage repayments. This the typical option when friends buy together as they will want to keep their finances separate.

I have previously warned about the risks of buying a property with another person, no matter who they are, friend, family or partner. With the rising cost of housing, losing some or all of your equity, could leave you unable to buy another home, so the risks are serious, therefore, always take professional advice before entering in to ANY financial arrangement with another person, sadly, that’s the way it is.

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