Stamp duty

jkl1983

Hi guys! Wish i'd found this site a couple of weeks ago but c'est la vie!
Anyway i was looking for a little advice on stamp duty...basically i made a number of offers on a property which was priced at £129,950, my final offer was £124,700 but it was rejected, anyhow i left it at that and decided to look for a different property...after viewing a few i found that nothing was capturing my attention like this first one so I went back with a revised offer of £126,500…which obviously means that I would be paying stamp duty of £1265 which is a right pain when I'm so close to the threshold. I'd asked for advice off the estate agent about keeping it under the stamp duty threshold but they said there was nothing that could be done…if the vendor wanted more than £125,000 then I'd just have to put up with the stamp duty. However, after reading this forum I've seen a lot of people talking about negotiating a separate price for fixtures and fittings which brings the actual purchase price below the threshold. My question is, is this something I can now do retrospectively even though my offer has been accepted?? That is, can I approach the vendor and ask that we reduce the price to say £124,950 and I then pay her £1600 for her to leave the fixtures and fittings (i.e the brand new carpets that have been laid all through the house and were included in the asking price, plus the curtains), or is this not allowed? Its just such a pain to be throwing away this £1200 when I could be spending it on some actual furniture (I'm a first time buyer by the way).

Thanks for any advice anyone can offer, i will be eternally grateful!

Massive_2

Have you exchanged contracts?

If not, you can pretty much do what you like, and the sums you mention are perfectly realistic as far as chattels and fixtures are concerned.

Go for it.

x_Wilco_x

I don't think you can legally do that anymore... Ol' Gordon caught on and closed the loophole! Other moneysavers, with a more recent experience, may be able to help better....

In respect of revising your offer, as long as you haven't exchanged contracts yet you can revise, or even withdraw, your offer as you wish - bearing in mind you will lose all associated costs should you pull out, or the vendor pull out, completely...

Also, some areas (regeneration and disadvantaged) are exempt from stamp duty - might be worth checking! You can do a postcode search here:

http://www.hmrc.gov.uk/so/disadvantaged.htm

jkl1983

No nothings been exchanged yet - the offer was only actually made on saturday and accepted.

I just wasn't sure if you could go behind the estate agents back effectively and put in a new offer directly to the vendor. Obviously there is no loss to the vendor as she still gets all of her money - it just saves us £1200! Plus we're been very understanding and have agreed to wait for as long as it takes for her to find a place (since we're living at home with parents so are in no rush)! Just don't want to get dragged in front of HMRC in a couple of months time for fraud!

jkl1983

Thanks Wilco, its not in a disadvantaged area so can't avoid it that way. Blooming Gordon Brown and his stupid rules...i've had nothing but taxes to pay while saving the deposit etc

Massive_2

jkl1983 wrote: »

Just don't want to get dragged in front of HMRC in a couple of months time for fraud!

Unless you attempt to evade SDLT entirely, the worst that can happen is that HMRC eventually bill you for the higher amount, so you won't be any worse off than if you'd paid up anyway.

x_Wilco_x

jkl1983 wrote: »

I just wasn't sure if you could go behind the estate agents back effectively and put in a new offer directly to the vendor. Obviously there is no loss to the vendor as she still gets all of her money - it just saves us £1200!

Are you still talking about the stamp duty? If so this is dealt with by your solicitor at completion not the Estate Agent! The Estate Agent will relay any reduced offer by yourself to the Vendor but may give you a hard time!

If you are talking about avoiding estate agent fees by going to the vendor behind the Estate Agents back (ie the vendor saves some money) as a way to reduce your costs then unfortunatly the contract the vendor has with the Estate Agent will not allow this (I am sure). It probably has a clause which states that if the agent finds the buyer (or a buyer is found via their direct advertising of the property) then the vendor will still need to pay the agreed figure even if the agent does no further work!!!

They aint stupid these Estate Agents :rolleyes:

jkl1983

I am talking about stamp duty..I meant go behind the estate agents and directly approach the vendor about changing my offer…the estate agents obviously have there own reasons for not actually wanting me to get in under the stamp fee (i.e. the lower commission payable to them for a sale of £125,000 compared to £126,500)…so I was suggesting approaching the vendor myself about splitting out the fixtures and fittings - my impression from the estate agents is that they would refuse to put this to the vendor as an alternative.

Hope that makes sense! I'm probably not making much though

Richard_Webster

Can't see why the agents would care or the seller either as long as they both get their money in the end.

Three points:

1. Don't muck about with all this £..995 nonsense - just offer £125,000 plus £1,500 for the carpets etc. (SDLT on £125,000 is nil.)

2. The £1,500 must be a reasonable reflection of the second hand value of the items being purchased otherwise there is a fraud.

3. If you do agree this then your loan to value (LTV) of your mortgage will be based on a percentage of £125K and you will need to tell your lender that is the price because they don't lend on carpets!

As a conveyancing solicitor I believe the information given in the post to be useful but I accept no liability except to fee-paying clients.

x_Wilco_x

You are right - estate agents have an incentive to sell the house for the biggest amount possible because of their commission, so you could avoid them to save on hassle however, they will eventually need to know. I am sure you want it to be all above board so I would suggest talking to your solicitor who may have some ideas and be able to offer your suggestion to the vendor, via there solicitor, direct... At least, that way, if it is possible you know it is above board!

Alternatively, you could wait until you get the survey back and see if anything shows up that could enable you to offer a smaller amount! If nothing does come up then you could still always revise your offer then.

I actually think you are in a good position because anybody with a property in that limited value area (125-130k) would expect offers just below stamp duty threshold, and I am sure their agents have informed them of that and marketed the property accordingly...

Good luck & let us know how it goes?