Is your house worth 260-310? Would you pay 2% stamp?

kmmr

silk wrote: »

That's what I'm saying though.. or rather, asking. If you want 300k you're likely not going to get offers above 290, even if the house is actually valued at 300 (i.e. the lower valuation from the bank is 300) and you are pricing fairly.

If the house is worth £300k, as a vendor I will wait for someone to pay it. If they won't, then it isn't worth £300k. If I can sell it for £300k, why would I let it go for £291?

So, we are now talking about a house that is NOT worth £300k. It is worth about £291k, as that is the maximum I can get as a vendor.

silk wrote: »

So if all you'd had so far were offers sub 290, then one day someone offers between 291-299 with you paying around 5,800 stamp - wouldn't you jump at that? Wouldn't' it make both buyer and seller happy?

It would make the buyer happy, it wouldn't make that much difference to a seller, as he is getting the same amount anyway (give or take). Obviously there are key values where it makes a bigger difference (again, I say closer to £260k). They key point is that the house is worth what the vendor is able to get for it. If he gets £300-£9k, the Value is £291k.

I understand why you are asking. The stamp duty is a big cash difference to you the buyer, but less so to the seller.

phoebe1989seb wrote: »

In the end the house sale went through at £250k and the buyer gave the vendor £10k in cash as he allegedly genuinely believed the house was worth more than £250k - neither the EA nor the solicitors involved were aware of this transaction :eek:

Well, yes, everything is possible if you are happy to break the law!

phoebe1989seb

martinsurrey wrote: »

I'll boil this down to a few lines

Linked transactions, stamp duty evasion, proceeds of crime, money laundering.

Totally agree martin - we were gobsmacked that someone in our acquaintance would be party to this :mad: However, AFAIK no-one ever found out as it was a cash transaction - and TBH, how would they? We moved away and thankfully lost contact with the person involved.......

kmmr

silk wrote: »

I'm not though, I'm offering 300k. I'd be offering 300k regardless of who pays the SDLT, and that's where you're losing me.

I'm not trying to find any loopholes, just a deal that benefits both parties whilst making sure SDLT is fully paid. Buyer happy because they have less upfront costs, seller happy because he got a quick deal close to asking price, government happy cos it got it's claws into a sack of free cash.

If there are genuine legal implications then I will stop looking into this, and save up an extra buffer just to be extra comfortable with the fees.

But you are not paying £300k! If you paid £300k, then the vendor would receive £300k.

Stamp duty isn't part of the value of the house. The house, in this case, has been purchased for £291k.

silk_2

martinsurrey wrote: »

The party that isn’t happy in the above is the mortgage company, as if everyone else is getting their cash, where is it coming from... that’s right, the mortgage company, and they wont allow it.

it’s not illegal, just won’t go through the underwriting process.

But by that logic I wouldn't be able to buy the (fairly priced) 300k house even if I did pay the SDLT.. hence the confusion. You're basically saying all mortgages are impossible.

To re-iterate I am applying for a 90% loan (270k) in either case.

silk_2

kmmr wrote: »

But you are not paying £300k! If you paid £300k, then the vendor would receive £300k.

Stamp duty isn't part of the value of the house. The house, in this case, has been purchased for £291k.

How am I not paying 300k? I apply for a mortgage of 300k (with 30k deposit), that's what he gets.

Where does the 9k magically come into it? It's a government fee, completely separate to the mortgage and to the value of the house - unless you're saying that all banks automatically deduct stamp in their valuation? In which case again all mortgages would be technically impossible because the bank would always value a property as a few thousand under it's minimum sell value!

poet123

Whist the banks/Building Soc may not value higher than the offer price, in our case (in Jan) my son was told in his mortgage offer to insure it for £35,000 more than he had paid for it (Repossession). Effectively, they were placing a higher value on it from that angle.

martinsurrey

poet123 wrote: »

Whist the banks/Building Soc may not value higher than the offer price, in our case (in Jan) my son was told in his mortgage offer to insure it for £35,000 more than he had paid for it (Repossession). Effectively, they were placing a higher value on it from that angle.

its not insured for value, its insured for rebuild cost, which in some areas is higher than value.

you can buy a house in a rundown area for £20k, but you can’t build one for that, if it blew up, the insurance company would need to rebuild it, and hence the higher insurance value than market value.

martinsurrey

silk wrote: »

How am I not paying 300k? I apply for a mortgage of 300k (with 30k deposit), that's what he gets.

Where does the 9k magically come into it? It's a government fee, completely separate to the mortgage and to the value of the house - unless you're saying that all banks automatically deduct stamp in their valuation? In which case again all mortgages would be technically impossible because the bank would always value a property as a few thousand under it's minimum sell value!

you are giving him £300k, but then he needs to pay £9k to the goverment for your stamp duty, leaving him only £291k !!!!!!!

if the house was worth £300k he wouldnt need to offer to pay £9k of your fees.

poet123

martinsurrey wrote: »

its not insured for value, its insured for rebuild cost, which in some areas is higher than value.

you can buy a house in a rundown area for £20k, but you can’t build one for that, if it blew up, the insurance company would need to rebuild it, and hence the higher insurance value than market value.

Rebuild cost is rarely higher than actual value because the land is already owned.

kmmr

In answer to your valuation question.

Yes - the bank values the property excluding stamp duty, and excluding your legal fees, and your moving costs... any cost that is not related the value of the security they are receiving for the mortgage.

From the banks point of view, they are looking at the value of their security. If I, as a bank, had to sell this property - what is it worth?? It is NOT worth £300k, even today, otherwise someone would have paid it. If they had to sell it, in theory they would only get the same as the vendor - ie £291k. (keeping value the same for simplicity)

So, the banks buffer for loss reduces from 10%, to 6% or so.