Same deal: developer pay stamp duty or lower purchase price and we pay it?

sbmcb

Final money out will be the same....

£550k asking price, negotiated to....

£530k and they pay 4% stamp duty or £490k and we pay 3% stamp duty.... Final price only has a fraction in it.

Thinking in terms of resale, does it look better to future buyers on land registry that we paid 530 rather than 490 so they feel they're getting a better deal or am I bring stupid?

Be honest- I appreciate any advice!

princeofpounds

You now have to declare such incentives to the land registry who take them into account. Plus almost every mortgage lender won't count incentives as part of the value.

So the only difference for you is paying stamp duty up front or as part of your mortgage.

sbmcb

Ok that's great advice, thank you

Mobeer

£490k and we pay 3% stamp duty is total 503k - this saves a lot relative to the other approach - too much to worry about some small difference in a future resale that might or might not exist.

shortchanged_2

It's all for the developers benefit because it looks better on the land registry figures for them.

sbmcb

Apparently our lender (Halifax) won't allow a gifted deposit anyway. Seems unfair as its such a common incentive these days. Anyone heard of this?

princeofpounds

Apparently our lender (Halifax) won't allow a gifted deposit anyway. Seems unfair as its such a common incentive these days. Anyone heard of this?

This is what I was saying. Almost no banks allow a gifted deposit.

Why is it unfair? The bank is interested in the loan only being a certain maximum % of the house price, so that you provide a buffer of equity to stop them suffering losses on their mortgage if they need to sell the house.

If you artificially pump up the house price by gifting a deposit then the value of that gift is 'fake'. It's economically identical to a price cut. When you sell the house on, the next buyer is not going to get that gift and so will reduce the price proportionately.

Why then should the bank accept a valuation including a gifted deposit? All it does is increase their risk.

angrypirate

sbmcb wrote: »

Apparently our lender (Halifax) won't allow a gifted deposit anyway. Seems unfair as its such a common incentive these days. Anyone heard of this?

Why is it unfair? Do you think the builder would give you an "incentive" if they could sell it for full whack? They are not giving you a discount because they like you - they are reducing the price because they cant sell it at the full price - ie it is not worth it.

sbmcb

Oh I totally understand that...

House advertised at 550k

We offered 490 to include stamp duty-declined
Eventual agreement: 490 and we go halves on stamp duty...

It'll just be a case of now asking developer to reduce price to 482k and we pay stamp direct to Hmrc. Completely understood that developer paying stamp makes the house look like it sold for more for developers benefit. I just thought, same amount coming out of my back pocket-482k, makes no difference to me if it goes to developer or Hmrc. Either way stamp is being paid.

I can see what you're saying about mortgage company....we take a mortgage for 490 (less deposit) when really they should only be lending us 482 - is that right more or less? The stamp duty being paid incentive would only mean we've an extra 14k or so for furniture etc... Still paying a 30% deposit.

Stamp duty seems so unfair!!! Another moan for another thread I'm sure!

angrypirate

sbmcb wrote: »

Oh I totally understand that...

House advertised at 550k

We offered 490 to include stamp duty-declined
Eventual agreement: 490 and we go halves on stamp duty...

It'll just be a case of now asking developer to reduce price to 482k and we pay stamp direct to Hmrc. Completely understood that developer paying stamp makes the house look like it sold for more for developers benefit. I just thought, same amount coming out of my back pocket-482k, makes no difference to me if it goes to developer or Hmrc. Either way stamp is being paid.

I can see what you're saying about mortgage company....we take a mortgage for 490 (less deposit) when really they should only be lending us 482 - is that right more or less? The stamp duty being paid incentive would only mean we've an extra 14k or so for furniture etc... Still paying a 30% deposit.

Stamp duty seems so unfair!!! Another moan for another thread I'm sure!

Its a tax on the purchase of a substantial assest. I dont think its particularly fair, but i think its fairer than a mansion tax.

Seabee42

The reason stamp duty is bad is the Government then has a bias on propping up the house market. (Note of either persuasion).

Extending "council tax" so that there are bands for more valuable houses is probably sensible, whether a wealth tax on top of that as well is just politics.