Seller pays stamp duty - can we do this?

lowriful

littlesparkles thanks for the reply.

Did you mean that those ones are happy with it or are they the ones who have a problems with it?

Richard_Webster

The point is that if you sell for £279,950 with "Stamp Duty Paid" then you actually only get £271,552 (SDLT of £8,398). Buyer's mortgage lender takes this s the "real" price for working out how much it will lend and for instance might only lend 90% of that amount = £244,397. If buyer was hoping to get a mortgage of £251,955 (90% of £279,950) he would be disappointed.

There's a further point that makes the whole thing a gimmick - if you agree it in those terms the buyer will actually have to pay £8,398 SDLT. Buyer pays however you dress it up - but of course you will have reimbursed him that amount by knocking it off the amount your solicitors expect on completion.

If buyer paid you £271,552 as the official price you would be no worse off. What is the SDLT on £271,552? £8,146. So by doing it the sensible way the buyer is £252 better off and you have lost nothing.

So faffing around with "paying stamp duty" is only any real help if lenders are stupid enough to lend higher LTV ratios on the headline price - at one time they would in some cases - now they very rarely will - and that is a good thing because a lot of trouble we have with bank over-lending was caused by this kind of thing.

lowriful

Thanks for the reply.

The point is that if you sell for £279,950 with "Stamp Duty Paid" then you actually only get £271,552 (SDLT of £8,398).

I would be happy with £271,552

If buyer paid you £271,552 as the official price you would be no worse off.

This is not currently an option. The choice is a buyer who can make a decent offer - and we pay SDLT - or no buyer at all. Which woud you choose?

So by doing it the sensible way the buyer is £252 better off and you have lost nothing.

By doing it the "sensible way" we will have lost the sale completely and the buyer will have lost out on a flat they want. So £252 is peanuts compared to what we'll lose!

So faffing around with "paying stamp duty" is only any real help if lenders are stupid enough to lend higher LTV ratios on the headline price - at one time they would in some cases - now they very rarely will

I take your point that some lenders will, some won't (although I wouldn't call the ones who do "stupid"! It's a decision they choose to make - they have lots of experience here, they're not doing it naively!)

Luckily we're doing the viewings ourselves, and will get a chance to talk to the viewers directly. I will advise them that we're happy to offer this but that they must speak to their conveyancer to see if they're happy with it, and whether they think the lender will be too, so that we don't all waste a lot of time on this if it's not going to work.

lowriful

Incidentally the reason I'm glad I'm not going through the estate agent on this one as they've tried to fob me off with a load of rubbish when I questioned this.

When I mentioned the problems some people have had with paying SDLT and LTV thresholds and lenders not being keen, I sent him a link to another forum where someone described the problems they'd experienced. Basically they'd agreed that their seller could pay SDLT, but it had taken their LTV over a threshold and so the lender wanted them to add the value of the SDLT to the deposit, making the whole exercise futile - in his case.

Our estate agent said "It seems to me that the person involved in that forum was a very inexperienced buyer and had a very bad conveyancer otherwise the situation would not even have been mentioned. "

This is twaddle surely?! The market for our flat is first time buyers so they are by definition inexperienced buyers! Also it wasn't the conveyancer who had a problem with it but the mortgage lender.

I can't stand being patronised!!! :mad:

Starting to understand why estate agents get a bad name!

Richard_Webster

I'd be interested to which lenders would treat a a payment of SDLT by the seller as not affecting the LTV ratio.

lowriful

Hi Rickard,

Sorry perhaps I worded that wrong.

I wasn't trying to say that for some mortgages it doesn't affect the LTV - it does for all by definition, of course!

However for some buyers, the change in LTV would take them over a LTV threshold, and it's this situation that would definitely make a difference. e.g. if their mortgage is a deal in which they can only have up to 80% LTV but adding STLT would take them to 83% - this won't work.

However where the change in LTV doesn't take them over a LTV threshold, the lender may be happy to go ahead (or not). Or so I hear!
I've seen lots of sellers advertising this, particularly at just over a stamp duty threshold, so it must work for some people, surely?

This is a buyer's incentive, and as long as it's registered as such it's legal isn't it? It's then up to the lender if they are happy to accept it or not, as far as I can tell?

Ivana_Tinkle

It doesn't work because, as others have said, mortgage lenders simply won't allow it. For some reason, no estate agents seem to know this (ours didn't, which is why our sale fell through). Either they're astonishingly ignorant of their own industry or they hope that they get the buyer and seller both committed to a sale, then the problem comes up and somehow you'll manage to negotiate and sort things out.

Yorkie1

littlesparkles wrote: »

I've seen this advertised on one or two houses on rightmove so it must happen. Also I am buying a new build and the builder is paying stamp duty for me. Some mortgage lenders are funny about this but not all. For example, Nationwide, Santander, Norwich & Peterborough.

lowriful wrote: »

littlesparkles thanks for the reply.

Did you mean that those ones are happy with it or are they the ones who have a problems with it?

1. The fact that a seller is willing to pay SDLT is completely irrelevant to the fact that if it's not a new build, lenders won't lend in the case of a seller gifted deposit.

2. As previously stated, new build houses are different. A limited number of lenders will consider lending in these situations.

Do not confuse the two.

lowriful

Yorkie I've seen lots of examples of "seller pays stamp" on properties which aren't new-build.

It must work for some people, surely?

brit1234

lowriful wrote: »

Yorkie I've seen lots of examples of "seller pays stamp" on properties which aren't new-build.

It must work for some people, surely?

Show us a mortgage provider who accepts this. People may put it on the rightmove page but we have never seen it work from the many posts on here.

People should simply drop there price instead and stop trying to comit land registry fraud.