Stamp Duty - Can we request that the vendor pays?

titusbungle

We offered £123k for a property on the market at £138k which has been rejected - they will not go below £135k. It has been up for sale for 6 months initially at £145k then £140k. My issue is not so much with the price but having to pay stamp duty, the EA said that we could offer X amount and request that they pay the stamp duty for us - is this allowed? It doesn't help if they just knock it off the agreed price as most of it would be mortgaged - we would require that they pay the actual amount. Any advice appreciated.

zzzLazyDaisy

The short answer is - yes you can ask the vendor to pay the stamp duty, but there would be little point as the over-all outcome would be the same.

There are lots of threads on this topic - have a look at this one:

https://forums.moneysavingexpert.com/discussion/4624249

princeofpounds

They can offer an incentive but this will need to be declared to the land registry and your mortgage provider so that they can remove it from their valuations.

These days there is little point in offering incentives like this because they are just a price reduction with more hassle and paperwork.

titusbungle

zzzLazyDaisy wrote: »

The short answer is - yes you can ask the vendor to pay the stamp duty, but there would be little point as the over-all outcome would be the same.

There are lots of threads on this topic - have a look at this one:

https://forums.moneysavingexpert.com/discussion/4624249

If they were to pay it then I wouldn't need to though?
£135k = £13,500 deposit plus £1350 SD

If they pay it then I'm £1350 better off surely?

We only have a 10% deposit as it is as we were FTB in 2006 and have had to pay towards our negative equity to enable us to be able to move.

martinsurrey

titusbungle wrote: »

If they were to pay it then I wouldn't need to though?
£135k = £13,500 deposit plus £1350 SD

If they pay it then I'm £1350 better off surely?

We only have a 10% deposit as it is as we were FTB in 2006 and have had to pay towards our negative equity to enable us to be able to move.

you would be better off overall, but not in cash flow

what would happen is this.

you pay £135k and they pay Stamp duty.

mortgage company finds out and reduces your mortgage offer to 90% of the net cash offered (£135k - £1.35K = £133.65k * 90% = £120,285) and you need to find the difference, £135,000-120,285 = £14,715.

so you pay an increased deposit, up by £1,215 (which is 90% of the stamp duty they have 'gifted' you.

by the end of the mortgage you are better off, but in the short term you are only marginally cash better off.

titusbungle

martinsurrey wrote: »

you would be better off overall, but not in cash flow

what would happen is this.

you pay £135k and they pay Stamp duty.

mortgage company finds out and reduces your mortgage offer to 90% of the net cash offered (£135k - £1.35K = £133.65k * 90% = £120,285) and you need to find the difference, £135,000-120,285 = £14,715.

so you pay an increased deposit, up by £1,215 (which is 90% of the stamp duty they have 'gifted' you.

by the end of the mortgage you are better off, but in the short term you are only marginally cash better off.

Thanks Martin, I didn't know that but it makes sense! Not what I wanted it be ne but that's life I suppose! Cheers :beer:

zzzLazyDaisy

Plus, in reality, very few sellers will agree to pay the stamp duty - especially once they have spoken to their solicitor...

Yorkie1

This is treated as a vendor gifted deposit, and most - if not all - mortgage lenders will not lend in these circumstances unless the seller is a property developer.

Ulfar

As vendors they must be mad to put a property at this price as they know it is on the stamp duty threshold.

happycamel_2

It might reflect the size of their mortgage

Richard_Webster

It is a gimmick and doesn't make much sense. Lender will treat it as price reduction so you might as well go for a price reduction and you would be very slightly better off.

Here's how:

If Price is £135,000 and seller "pays" SDLT then in reality you pay £133,650 for the house (because it is done by way of allowance because you actually have to pay the SDLT) and you have to find £1,350 SDLT.

If seller reduces price to £133,650 then he still gets that amount but the SDLT on £133,650 is only £1,336 and you have saved £14!

In both cases lender is not going to lend more than 90% of £133,650.

When lenders were throwing money around like there was no tomorrow they used to accept these dubious schemes to disguise a price reduction but they don't do that any more so what's the point?