Aghhhh....Estate Agents and Stamp Duty

Better_Days

Looked at a property yesterday - marketed as OIEO £250k.

We offered £250k which was rejected. EA explained that vendors want £265k. Of course that takes us over the SDLT threshold. The EA said that the £15k difference could be made up of F&F and they have solicitors who can get this sort of deal through.

I told EA that HMRC are clamping down on these attempts at SDLT avoidance and I could not see any way that we could get to a figure of £15k for F&F. Indeed HMRC are currenlty in the process of clawing back SDLT not paid as a result of avoidance schemes.

With hindsight perhaps I should have played along a bit more to see what exactly the EA was suggesting but £15k in F&F just seemed so OTT to me.

This was so brazen - a suggestion to defraud the public purse with all the risk on the buyer. I am tempted to write to the vendor and let them know what their EA is doing - but what good would it do?

Dang we are not having much luck on this house search

ndf9876

My response to this sort of thing has been the same as yours, that I will not participate in any avoidance schemes which may incur investigation from HMRC.

Best of luck to the vendors getting £265 for the place, in my experience (and something I have always been upfront with EAs about) any property with a price tag of £260-265k is begging for offers of £250.

I made an offer, subsequently accepted, on a property priced at £265k. My offer was £250k. That's just one experience of many, but there you go. My personal advice is to walk away from these "brown envelope" jobs as I call them.

hazyjo

They won't get away with more than around £2k max for F&F, etc (and will have to prove that!).

Stoopid price request!

Is it comparable to other similar nearby sold properties? If it's a bargain, maybe I could get it. If things are selling around £250k, they're havin' a laugh!

Jx

AndyPK

I looked at a house just over 250k and it was advertised that the seller would pay the stamp over 250k so it wouldn't impact the house value.
Maybe u could do that.

hazyjo

AndyPK wrote: »

I looked at a house just over 250k and it was advertised that the seller would pay the stamp over 250k so it wouldn't impact the house value.
Maybe u could do that.

Won't be acceptable to the mortgage provider.

Can get away with that with new builds, that's about it.

Jx

DRP

hazyjo wrote: »

Won't be acceptable to the mortgage provider.

Can get away with that with new builds, that's about it.

Jx

Quite a few people have told me their local EAs are offering "SD-paid" (seems to be a 'thing' in slow areas).

What are the reasons this isn't acceptable to lenders?

kwmlondon

DRP wrote: »

Quite a few people have told me their local EAs are offering "SD-paid" (seems to be a 'thing' in slow areas).

What are the reasons this isn't acceptable to lenders?

Well, it means that if you wanted to sell the place in 12 months and the market hasn't moved you'll have to either take £250k or pay someone £15k. If there's a dip in the market it could easily push you into negative equity. Maybe if you paid a 40% deposit, but they'd still not be happy.

Would cause havoc with the valuations too, I'd have thought.

Better_Days

hazyjo - difficult property to value as is in a small village where there are not many properties and not much turnover. I think it may be worth a bit more than £250k but it is not a bargain at £250k. Needs a new kitchen and the layout is a bit awkward which wouldn't suit everyone.

Looking at Property Bee they initially had the property on at £288k which I suspect didn't bring in any viewings at all and within 3 weeks have dropped to OIEO £250k.

Now getting some interest, but I suspect offers will be at the £250k mark. The OIEO figure will put £250k in the minds of buyers straight away. I do have some sympathy with the vendors as they are in a difficult price bracket, but it was the EA's suggestion of fraud which really put my back up!

I have toyed with the idea of offering £255k (so vendors would reduce by £10k and I would pay £10k more in effect - taking into account the SDLT increase) but it seems so daft to go over the SDLT threshold by such a small amount.

I too have seen offers to pay SDLT or 2% of the SDLT - it seems to be a marketing tactic of some EA's round here.

AndyPK

Better_Days wrote: »

or 2% of the SDLT -

Yeah that was what I had seen.

hazyjo

Better_Days wrote: »

I have toyed with the idea of offering £255k (so vendors would reduce by £10k and I would pay £10k more in effect - taking into account the SDLT increase) but it seems so daft to go over the SDLT threshold by such a small amount.

I too have seen offers to pay SDLT or 2% of the SDLT - it seems to be a marketing tactic of some EA's round here.

In theory, it probably is 'worth' more than £250k. I was in the same position with my house before last. Bought at £227,500 in 2006, sold for £228,500 in 2011. Inbetween, the value shot up to nearer £300k. Unfortunately, due to the SD threshold, the 'value' is what someone will be willing to pay, not what the house should be worth. I should have been getting around £265k as prices had still gone up a bit since 2006, but, because of the SD, it was dragged back down to under £250k.

If you offer £255k, the chances are it'll be valued at or under £255k anyway (affecting your mortgage)...

Jx

DRP

kwmlondon wrote: »

Well, it means that if you wanted to sell the place in 12 months and the market hasn't moved you'll have to either take £250k or pay someone £15k. If there's a dip in the market it could easily push you into negative equity. Maybe if you paid a 40% deposit, but they'd still not be happy.

Would cause havoc with the valuations too, I'd have thought.

I'm still not sure i understand this!

what difference does it make to the lender that the seller pays the >7.5k SD (or the extra ~5k SD) ?


is it because essentially, the lender is funding the SD? (ie. the difference between 250k and the ''SD-free' selling price?)