Vendor wants 'help with moving' costs

zzzLazyDaisy

No it is not legal.

You are obliged to inform your solicitor of all payments to the vendor, including fixtures and fittings. There is a form to be completed and sent to HMRC (this did not used to be the case, but has been for some time).

HMRC investigate all cases of additional payments to the vendor where the purchase price is close to the SD threshold, and the rules are ruthlessly applied. I'd like to say that I am astonished that the EA is willing to help you to commit tax fraud, but to be honest nothing surprises me.

OP don't do it. If things go wrong, it will be you picking up a stamp duty bill for 3% of the full purchase price, and possibly a fine on top.

somethingcorporate

Chances are if you do pay extra for F&F being so close to the stamp duty threshold HMRC will be all over this like white on rice as is obviously a way to pay more money for a property but avoid the additional stamp duty.

You could always increase your offer but ask them to pay stamp duty (or the additional 2% anyway).

The second hand contents of a house are not really worth much.

zzzLazyDaisy

somethingcorporate wrote: »

You could always increase your offer but ask them to pay stamp duty (or the additional 2% anyway)..

That would be pointless as any payment from vendor to buyer is viewed as a discount off the purchase price and must be declared to the lender. This result would be that the purchase price would be reduced accordingly for lending purposes, and this could have an effect on the LTV and therefore the mortgage offer.

Too many complications. Just say 'no'.

InMyDreams

JenM wrote: »

We cannot afford the extra Stamp duty to go over the threshold so cannot increase our offer (though the bank would happily lend us more money at 90% ltv).

What about doing it the other way round? If the reason you can't go over £250K is because of the stamp duty, ask the vendors to pay it for you (or at least some of it). Then you can offer slightly over.

HRMC should be happy because they get their 3%

Say, for example, you offered £260K, stamp duty would be £7800, but if the vendors pay £5200 towards it, you still only pay 1%.

The problem with this would be that the bank would have to agree than the property is worth £260K. (But if they don't, you have even more grounds to revise your offer back down to £250K.)

That said, if yours is the only offer on the table at £250K, I'd probably hold out for that. Bit dangerous to pay £260K for a property if they can't get anyone else to even pay £250K for it.

Edited to add:

Ah, I see I crossposted.

zzzLazyDaisy wrote: »

That would be pointless as any payment from vendor to buyer is viewed as a discount off the purchase price and must be declared to the lender. This result would be that the purchase price would be reduced accordingly for lending purposes, and this could have an effect on the LTV and therefore the mortgage offer.

Too many complications. Just say 'no'.

So how come there are so many properties on Right move saying that vendors will pay towards stamp duty? I assumed this would be OK as HMRC were still getting their hit?

martinsurrey

InMyDreams wrote: »

Edited to add:

Ah, I see I crossposted.


So how come there are so many properties on Right move saying that vendors will pay towards stamp duty? I assumed this would be OK as HMRC were still getting their hit?

HMRC are happy,

Mortgage company isnt.

InMyDreams

Well in that case, as I said, they revise their offer back down.

JenM_2

Thanks everyone - very helpful and consistent advice.

We asked our mortgage advisor about them paying the stamp duty and had already been advised about the incentive clause and the complications of mortgages.

The entire system seems geared against home movers at the moment as despite offering more money every time (and this is the fourth house we have offered on) we keep getting knocked back.

Side note - the Estate Agents seem to save all the offers up from a weekend and present them to the vendors on the Monday. Therefore we are always going to come off 3rd best - is this right?!

somethingcorporate

zzzLazyDaisy wrote: »

That would be pointless as any payment from vendor to buyer is viewed as a discount off the purchase price and must be declared to the lender. This result would be that the purchase price would be reduced accordingly for lending purposes, and this could have an effect on the LTV and therefore the mortgage offer.

Too many complications. Just say 'no'.

Really? so the house we have just bought from a developer for £310k with the developer paying the stamp duty.

What are the likely complications?

We did this as well as negotiating money off the value of the house.

martinsurrey

somethingcorporate wrote: »

Really? so the house we have just bought from a developer for £310k with the developer paying the stamp duty.

What are the likely complications?

We did this as well as negotiating money off the value of the house.

dont worry

new builds have thier own rules...

shortchanged_2

somethingcorporate wrote: »

Really? so the house we have just bought from a developer for £310k with the developer paying the stamp duty.

What are the likely complications?

We did this as well as negotiating money off the value of the house.

Yes this is a different story.

By doing it this way the sold price on the land reg figures looks higher than it actually should be, so for any other potential buyers it looks like this is the price people have been paying for these new build properties.

Again it's all a bit of a con really, to make house prices appear higher.