Estate agent and legal fees of seller paid by buyer?

jiffk

Hi,

We've made an offer on a house that is right at the stamp duty threshold £250k the seller will accept but wants us to cover estate agent and contribute to legal fees at a total of £3900

Ive had conflicting advice on this so far, would the £3900 be taken as the house value and therefore we would then be buying at £253900 an pay 3% stamp duty or would this be seen as extra and not in the value of the property keeping us stamp duty free (as we are first time buyers)

Thanks

Senior_Paper_Monitor

Not acceptable as the seller would be 'assigning a debt' which is specifically covered in the relevant legislation.

Be aware that solictors and HMRC subsequently regularly check transactions just under the thresholds - resulting actions can be dragonian for all involved (equal responsibility on buyer, vendor and conveyancer).

Israfel

From your saying I'd assume you pay the estate agent and legal fees separately and they'll accept the price below the threshold so you won't have to pay stamp duty.

Senior_Paper_Monitor

Sorry, but Israfel is incorrect !

I have spent a considerable amount of time researching this issue amongst a number of other SDLT matters. The relevant regulations are:

Paras 7 & 8 of Schedule 4 (Stamp Duty Land Tax: Chargeable consideration), namely:


Valuation of non-monetary considerationE+W+S+N.I.
7Except as otherwise expressly provided, the value of any chargeable consideration for a land transaction, other than—E+W+S+N.I.
(a)money (whether in sterling or another currency), or
(b)debt as defined for the purposes of paragraph 8 (debt as consideration),
shall be taken to be its market value at the effective date of the transaction.
Debt as considerationE+W+S+N.I.
8(1)Where the chargeable consideration for a land transaction consists in whole or in part of—E+W+S+N.I.
(a)the satisfaction or release of debt due to the purchaser or owed by the vendor, or
(b)the assumption of existing debt by the purchaser,
the amount of debt satisfied, released or assumed shall be taken to be the whole or, as the case may be, part of the chargeable consideration for the transaction.
(2)If the effect of sub-paragraph (1) would be that the amount of the chargeable consideration for the transaction exceeded the market value of the subject-matter of the transaction, the amount of the chargeable consideration is treated as limited to that value.
(3)In this paragraph—
(a)“debt” means an obligation, whether certain or contingent, to pay a sum of money either immediately or at a future date,
(b)“existing debt”, in relation to a transaction, means debt created or arising before the effective date of, and otherwise than in connection with, the transaction, and
(c)references to the amount of a debt are to the principal amount payable or, as the case may be, the total of the principal amounts payable, together with the amount of any interest that has accrued due on or before the effective date of the transaction.

jiffk

thanks, yes the legal fees and estate agent fees would be payable directly but as senior paper monitor has pointed out it would be seen as debt that the seller has that you are paying.

The same way that if they had a £4k debt with another estate agent and gave us the property for £4k less in exchange for us paying off the debt it would be seen as taxible.

TrickyDicky101

I would have thought if the house is close to the SDLT threshold then the vendors are unlikely to get an improved offer off anyone else so I would be tempted to stick to my guns offer-wise and tell them you aren't raising it (and aren't paying their EA/legal fees either).

Thrugelmir

TrickyDicky101 wrote: »

I would have thought if the house is close to the SDLT threshold then the vendors are unlikely to get an improved offer off anyone else so I would be tempted to stick to my guns offer-wise and tell them you aren't raising it (and aren't paying their EA/legal fees either).

Agree totally with this view.

magpiecottage

Other posters are correct on this. This nonsense really is the result of the system of stamp duty. £250K is not a threshold with anything above it attracting the tax but a precipice with everything below it taxed at the same rate.

jiffk

it was actually on the market at 285 so they are already reluctant to sell at this level it seems.

and we are willing to go the little bit extra as its the only property we've seen since we started looking last year that ticks all the boxes and is in a good area.

We are currently looking at buying the contents that they can leave instead of paying the estate agent fees etc

Are there any guidlines on what would be considered a fair price for things or a site to do a bit of research?

We are looking at white goods (washer/dryer, dishwasher and kitchen/hob), carpets which again we've been told are fairly new, custom curtains and the shed and its contents (mower/stimmer etc)

Senior_Paper_Monitor

Fixtures and fittings cannot be excluded / chattels can.

Is shed a genuinely moveable item / is it on the plans shown on title deed ?

White goods ..... integrated units no way / stand alone units OK ?

Everything ust be listed on an inventory and individually valued at true market value (second hand furniture and generally white goods have little market value) - I suspect fitted carpets would be an issue and even if allowed will be of little value (what else would they do with them?) and the same would apply for "custom curtains".

Pop down to your local second hand shop and see how much you could buy for £3,900.

Be assured that the nice man from HMRC will be very willing to haggle over a few pounds on value if he sees a £7,617 windfall potential (+ fines).

Be aware that conveyancng solicitor is required to advise lender of the parallel transaction and copy the details.

Be very careful with this plan !