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

martinsurrey

silk wrote: »

I didn't know they would have that kind of information, I thought they only saw what you need to borrow and what the house is worth.. not what other private deals you and the seller make to close the deal.

In that case you are saying it would be impossible?

A shame, because it would help sellers sell and buyers buy.



Why would the bank know or care that once he gets his 300k he then pays some of my stamp? Isn't it his money once it's in his bank?

Sorry if I am frustrating you..

If the house was worth £300k he wouldnt need to pay the £9k for you, which means if he is paying £9k for you, its not worth £300k!

I'm going for a lie down in a dark room now, last comment on this from me.

andy.m_2

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.

No they are not, they are telling you that you need £35k more than you paid to rebuild.
Nothing more, nothing less.

poet123

andy.m wrote: »

No they are not, they are telling you that you need £35k more than you paid to rebuild.
Nothing more, nothing less.

I disagree because we asked them! The house went for a really good price for the location, condition, and area because 2 prior sales had fallen through due to FTB not being able to get a mortgage or having an offer recinded due to their personal circs. It was done and dusted over Xmas and because it was an ususual note in the offer the Solicitor asked them why it was there. They said because the true valuation was that much higher than the purchase price.

It is on a large plot in the centre of a very desirable village, with Outstanding schools within easy reach.

andy.m_2

silk wrote: »

To be honest house prices around here are going for almost 100% of the asking value anyway

House value possible 320k. They have advertised at 300k and still not sold.
You are potentially asking them to settle at 291k.
Not 100% of asking, or anything like it in fact.

Stop thinking of SDLT as a "nothing tax", it is an extra cost associated with buying a more expesnive house.
You also state that to get the £9k would mean 6 months more renting with "dead money", it is not, it is a means to you affording the house you want.

I mean no offence and this is not an assumption on your means, but is this your first purchase over the SDLT threshold?
The first time it stings and you see no sense in it, each time after that you accept that this is the way things are and factor those figures into the overall cost of buying a place.

ToasterScheme

silk wrote: »

I didn't know they would have that kind of information, I thought they only saw what you need to borrow and what the house is worth.. not what other private deals you and the seller make to close the deal.

In the vast majority of cases the solicitor working for you (the buyer) is also working on behalf of the lender. And they also have legal obligations to HMRC to ask you about all linked transactions (i.e. the vendor paying the stamp). So you can only hide it by lying to the solicitor.

That means, of course, that you can't write the agreement into the contract. So you are relying on a handshake from the seller that he will actually pay the SDLT.

Worse than that, you solicitor will probably want to have sight of the SDLT money before he will even exchange with the seller. So you're asking the seller to give you the SDLT money (in cash - which he may not have before the sale completes..., and with no paperwork at all...) BEFORE you've even exchanged. What's to stop you just walking away with it?

In the normal run of things these sort of ordering problems don't arise because the solicitors can see exactly where all the money flows are.

zzzLazyDaisy

silk wrote: »

Why would the bank know or care that once he gets his 300k he then pays some of my stamp? Isn't it his money once it's in his bank?

Sorry if I am frustrating you..

Your solicitor acts on your behalf and on behalf of the lender. S/he has certain duties towards the lender which includes complying with the law, and the lender's requirements - one of which is to establish where the deposit is coming from and to identify any other transactions connected with the purchase.

You have to declare ALL transactions between yourself and the seller, that includes and cash-back incentives, any arrangements to purchase chattels/furniture/white goods etc, you have to show where the deposit has come from.

The rules are particularly strictly applied when dealing with a house that is valued around the stamp duty threshold for exactly this reason.

The seller cannot directly make a contribution towards your stamp duty, as neither his conveyancing solicitor nor yours would be a party to it. They could get struck off.

So what you are actually proposing is that the seller gives you a 'backhander' on completion on the purchase. How are you going to enforce this, and what are you going to do if the seller does not follow through? Take him to court and explain to the judge that you and he colluded to defraud the lender and now he has renaged on the agreement? The fact that an illegal contract is unenforceable would be the least of your worries.

The reason you have to declare this private cashback, is because the seller is literally refunding part of your purchase monies after the event. Which means that although the declaration of the price paid made on the mortgage application forms, and the land registry transfer forms, is £X, the real price paid is £x less the cashback/refund.

If you cannot see why that is a fraudulent declaration, so be it.

In that case may I suggest that you have the courage of your convictions and discuss your proposals openly and honestly with your conveyancing solicitor.

JimmyTheWig

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.

In which case, why would the seller accept your suggestion of them paying the tax?

If it's because they want a quick sale (or similar reason) then presumably they would also agree to a purchase price of £291k with you paying the tax yourself?

That's all fair enough. If you'd like to see it as offering £300k but they pay the £9k tax that's fine.
But you need to realise that it is exactly the same as you offering £291k.

So, how much would the mortgage company lend you on a 90% mortgage with a purchase price of £291k?
They would lend you 90% of £291k.
Even if the property was valued at £300k?
Yes, because the seller accepted an offer of £291k.
Even if similar properties sell for £320k?
Yes, because the seller accepted an offer of £291k.

Something is only worth what people are prepared to pay for it. The seller offered his house on the open market and the best offer he got was £291k. That's a much better indication than anything a surveyor could tell the bank about how much it is worth.

silk_2

zzzLazyDaisy wrote: »

If you cannot see why that is a fraudulent declaration, so be it.

In that case may I suggest that you have the courage of your convictions and discuss your proposals openly and honestly with your conveyancing solicitor.

I think I've made it perfectly clear that I'm trying to find a legal way to satisfy all parties. I don't understand why anything is fraudulent (house worth x, pay x, stamp is y, y is paid.. what's the issue), but if it is, then so be it, I will steer clear. I don't think I ever suggested that I didn't want it to go through the solicitors legally, rather I was trying to comprehend why a tax that can be paid by anybody (even my Mum!) affects the literal value of a property. And I still don't.

Anyway..

I've just spoken to a couple of estate agents and they say it isn't uncommon for the seller to pay some or all of the stamp (legitimately), that they see it happen and in some cases see the seller promote it.. and that mortgages still do go through.

So why do most posts here suggest it isn't possible?

Dan-Dan

silk wrote: »

I think I've made it perfectly clear that I'm trying to find a legal way to satisfy all parties. I don't understand why anything is fraudulent (house worth x, pay x, stamp is y, y is paid.. what's the issue), but if it is, then so be it, I will steer clear. I don't think I ever suggested that I didn't want it to go through the solicitors legally, rather I was trying to comprehend why a tax affects the literal value of a property. And I still don't.

Anyway..

I've just spoken to a couple of estate agents and they say it isn't uncommon for the seller to pay some or all of the stamp (legitimately), that they see it happen and in some cases see the seller promote it.. and that mortgages still do go through.

So why do most posts here suggest it isn't possible?

Why would a vendor , unless desperate , offer to pay SD on a house SO FAR above the 250k threshold ?
If it were me , i would just think you cant afford my house , !!!!!! off!

silk_2

Dan-Dan wrote: »

Why would a vendor , unless desperate , offer to pay SD on a house SO FAR above the 250k threshold ?
If it were me , i would just think you cant afford my house , !!!!!! off!

You wanted 300, you'd refuse 300 because of 5k stamp? Interesting. Surely the same !!!! off logic applies to someone offering you 295?

I personally don't see anything up to 300 as that much above the bracket.. and tbh we're *all* victims of the fact that the government hasn't changed the bands on the taxes anyway; if they had then current inflation would put the 3% band at 675k.

Anyway it was a poll so all inputs are fair.