Helping Your Child Buy Without Paying ADS (Additional Dwelling Supplement)
Short answer: a joint borrower sole proprietor mortgage lets a parent go on the mortgage without going on the title deeds. The parent’s income supports affordability, the child owns the property outright, and because the parent is not acquiring an interest in a second property, the Additional Dwelling Supplement of 8 per cent is not triggered.
On a £150,000 flat, that difference is £12,000 before deposit or legal fees.
I am Ingrid Cairns, a mortgage adviser based in Strathaven, South Lanarkshire. This has become one of the most common conversations I have with parents in Strathaven, Hamilton, East Kilbride and across Glasgow, particularly those with children starting university or their first job.
What is a joint borrower sole proprietor mortgage?
A joint borrower sole proprietor mortgage, usually shortened to JBSP, separates two things that normally go together.
The borrowers are the people named on the mortgage and legally responsible for the repayments. The proprietor is the person named on the title deeds who legally owns the property.
In a standard joint mortgage both parties are borrowers and both are owners. In a JBSP arrangement the parent is a borrower but not an owner. The child is the sole owner.
That single distinction is what makes the arrangement useful, and it is also what makes it something to enter deliberately rather than casually.
Why it matters for Additional Dwelling Supplement
The Additional Dwelling Supplement is a Scottish tax charged on the purchase of an additional residential property. It currently sits at 8 per cent of the full purchase price and is payable on top of Land and Buildings Transaction Tax.
If a parent who already owns a home buys a flat for their child in the parent’s own name, that is an additional property and ADS applies. On a £150,000 purchase that is £12,000.
Under a JBSP arrangement the parent does not acquire an interest in the property. The child is the sole proprietor. As the parent is not buying a dwelling, the ADS charge does not arise on their side.
Where the child owns no other property, they may separately qualify for first-time buyer relief on their own purchase.
Tax treatment always depends on the specific facts, including whether either party owns other property and how the funds are provided. This is a matter for a solicitor rather than a mortgage adviser, and you should take that advice before committing. What a broker can do is make sure the mortgage is structured so that the option remains available to you.
The student flat scenario
The situation I see most often runs like this. A son or daughter is starting at university in Glasgow, Edinburgh or Dundee. The parents are looking at three or four years of rent at £600 to £700 a month for a room in a shared flat.
Over four years that is somewhere between £28,000 and £34,000 with nothing to show for it at the end.
The alternative is buying a small flat. The obstacle is that a student cannot evidence enough income to borrow on their own, and buying in the parents’ name attracts ADS and removes any first-time buyer relief the child might otherwise use later.
A JBSP arrangement addresses both. The parents’ income supports the borrowing, the child owns the flat, and if there are spare rooms, rental income from other students may contribute to the running costs, subject to lender consent and the appropriate consents and licensing.
It is worth planning this well ahead of the academic year. Purchases take time and the useful window is narrower than people expect.
What parents need to understand before agreeing
This arrangement works, but it carries real obligations and I would rather set them out plainly at the start.
- Liability is full, not partial. If the child cannot make the payment, the lender looks to the parent. Arrears affect both credit files.
- It affects the parents’ own borrowing. The commitment appears in affordability assessments for any future remortgage or application.
- Age matters. Lenders assess the term against the parents’ age at the end of it, which can shorten the available term or narrow the lender pool.
- The parent has no ownership. They are liable for the mortgage but hold no legal interest in the property, which has implications if relationships or circumstances change.
- There should be a documented understanding between the family about what happens if someone loses their job, separates, moves abroad or dies.
None of these are reasons to avoid a JBSP arrangement. They are reasons to enter it with a clear head and proper advice on both the mortgage and the legal side.
How it differs from a guarantor mortgage
A guarantor mortgage and a JBSP mortgage are frequently confused, and they are not the same thing.
A guarantor sits behind the mortgage as a backstop and is called on only if the borrower defaults. The guarantor’s income is not usually used to increase the amount that can be borrowed.
In a JBSP arrangement the parent is a borrower from day one. Their income is part of the affordability calculation, which is what allows a larger loan than the child could obtain alone.
In practice, guarantor products have become far less common and JBSP has largely taken their place.
How it differs from a standard joint mortgage
In a standard joint mortgage both parties are on the deeds. Both own the property, both are liable, and if one already owns a home, the purchase is treated as an additional dwelling with ADS applying.
In a JBSP arrangement only the child is on the deeds. The child owns the property outright, may qualify for first-time buyer relief, and can sell or remortgage in their own name in future without the parent needing to be removed from the title.
Getting the exit right
A JBSP arrangement is not usually meant to last for the full mortgage term. The intention is normally that the child’s income grows to the point where they can support the borrowing alone.
When that happens, the parent comes off the mortgage. That is a remortgage or a deed of variation depending on the lender, and it is subject to the child qualifying on their own at that point.
It is worth having a rough timescale in mind at the outset, and reviewing it every couple of years rather than leaving it to drift.
Frequently asked questions
What is a joint borrower sole proprietor mortgage?
A joint borrower sole proprietor mortgage is an arrangement where one party is named on the mortgage and liable for repayments but is not named on the title deeds. The other party owns the property outright. It is commonly used by parents helping a child buy.
Does a joint borrower sole proprietor mortgage avoid the Additional Dwelling Supplement in Scotland?
Because the parent is not acquiring an interest in the property, the parent does not trigger the Additional Dwelling Supplement, which is currently 8 per cent in Scotland. Tax treatment depends on individual circumstances and should be confirmed with a solicitor.
How much is the Additional Dwelling Supplement in Scotland?
The Additional Dwelling Supplement in Scotland is 8 per cent of the full purchase price, charged on the purchase of an additional residential property in addition to Land and Buildings Transaction Tax. On a £150,000 property that is £12,000.
Can I buy a flat for my son or daughter at university?
Yes. Many parents do so through a joint borrower sole proprietor mortgage, which allows the parents’ income to support the borrowing while the property is held in the student’s name. Buying in the parents’ own name would generally attract the Additional Dwelling Supplement instead.
Is a joint borrower sole proprietor mortgage the same as a guarantor mortgage?
No. A guarantor is a backstop who is only called upon if the borrower defaults, and their income does not usually increase the amount that can be borrowed. In a joint borrower sole proprietor arrangement the parent is a borrower from the outset and their income forms part of the affordability assessment.
Can a parent be removed from a joint borrower sole proprietor mortgage later?
Yes, usually by remortgaging into the child’s sole name once the child’s income supports the borrowing on their own. This is subject to the child qualifying with a lender at that time.
Which lenders offer joint borrower sole proprietor mortgages in Scotland?
A number of mainstream and specialist lenders offer them, though criteria vary considerably on maximum age, term, and how the arrangement is documented. A broker will identify which lenders suit your circumstances.
Get in touch
If you are weighing this up for a child starting university or moving into their first flat, it is worth starting early. There is groundwork to do on both the mortgage and the legal side, and the timescales are longer than most families expect.
Call me on 01357 680660 or get in touch through the contact form here.
