Offering stamp duty paid for house sale

HxBro

I'm considering on offering stamp duty paid on my house which is currently for sale, the house is currently marketed at 168k so first time buyers won't be effected but other potential buyers might be more interested.

Is this a good idea ?
What are the legal implications ?
Would it effect house value for the buyers mortgage company ?

Richard_Webster

Quite likely to complicate matters for your buyer and his mortgage because he will assume he can get a mortgage on the price before the £1680 is deducted and then find that the mortgage is worked out on the reduced price which might mean he can't proceed.

All you are really saying is you will knock that amount off the price so why not do just that?

G_M

I assume the advantage of offering to pay stamp duty is a) if a FTB proceeds, you get the full price and the SD costs you nothing and b) it adds to marketing appeal - it may look outwardly like a better deal than just marketing the house at £1680 less.

However as Richard says there are mortgage complications + legal ones. Ultimately the buyer is responsible for paying SD, so some extra legal arrangement is required.

DVardysShadow

HxBro wrote: »

I'm considering on offering stamp duty paid on my house which is currently for sale, the house is currently marketed at 168k so first time buyers won't be effected but other potential buyers might be more interested.

Is this a good idea ?
What are the legal implications ?
Would it effect house value for the buyers mortgage company ?

Not good or bad. Just useless.
I would not bother doing it, so no idea on legal implications
House value for lender would take into account the fact you are offering SD - particularly nowadays, so no benefit to your buyer

It smacks of desperation, so I would only do it if I wanted to convey that I was desperate and needed an offer, any offer.

HxBro

Not desperate, just looking at ways to get people looking at the house from the marketing point of view.

I don't think reducing the price by the amount will have much of an effect, I think there are too few people looking for houses in my area, the other similar sized properties are on for slightly more and a bit less we sit in the middle and they don't seem to be selling either.

BiggaThanBen

Richard_Webster wrote: »

All you are really saying is you will knock that amount off the price so why not do just that?

Not exactly:
discount = less mortgage ("bank's money" anyway)
no SD = savings towards the deposit/moving costs for buyers

can make a difference for some people

boots_babe

We offered stamp duty paid on our last property and it worked well. It didn't cause any complications or confusion with our buyer or with them arranging their mortgage. So long as everyone knows what is being agreed, at the point of accepting the offer, I can't see an issue. We would definitely go down that route again.

Richard_Webster

Quote:
Originally Posted by Richard Webster
All you are really saying is you will knock that amount off the price so why not do just that?
Not exactly:
discount = less mortgage ("bank's money" anyway)
no SD = savings towards the deposit/moving costs for buyers

can make a difference for some people

Only if the lender will lend on a LTV ratio of the original price.

Some worked examples below:

So if seller is "paying the SDLT" then this really means there is a discount on completion of that amount as the buyer still has actually to pay the SDLT to the HMRC. To make this example work I'll leave aside the legal costs and Land Registry and Search fees because they would be there anyway.

So original price £200K and if Lender was going to lend 90% - £180K without the seller "paying the SDLT" the buyer has to find £20K + £2K SDLT. = £22K.

In theory with discount buyer only has to find £20K. That's OK if mortgage lender will accept that but buyer's solicitor has duty to tell lender about it so in many cases lender will make a revised offer of 90% of £198K which is £178,200 so buyer has to find the difference of £19,800 plus the SDLT of £2,000 (total £21,800) so the net effect of all this is the buyer has saved £200 on the amount he would have had to have found if he bought for £200k with no discount!

If the price is simply reduced to £198,000 with no faffing about concerning SDLT buyer gets mortgage of £178,200 and has to find £19,800 balance and £1,980 SDLT which gives a total of £21,780 so buyer is £20 better off than with the discount and seller still gets £198000 which is what he wanted in the first place.

So unless seller is pretty sure buyer's particular mortgage lender will ignore the "discount" I cannot see the point of doing it.

If the buyer is getting a low LTV mortgage and a price reduction would not affect it then he would rather have the price actually reduced because then he makes a slight saving on the SDLT anyway.