Complete Tomorrow: Stamp Duty Question?

Dave_the_Ginger_Cat

AFAIK the land registry price has to be registered as the lower amount, and therefore the stamp duty payable is 1% of this amount. If Halifax pay you 1% of the same value, then you are no worse off

I think it's the contract and transfer deed that need changing.

This makes interesting reading on this topic
https://www.whatdotheyknow.com/request/gifted_deposits_2

and we have a Land Registry rep who posts on this forum - perhaps they can help further.

fatmcgav

Dave_the_Ginger_Cat wrote: »

AFAIK the land registry price has to be registered as the lower amount, and therefore the stamp duty payable is 1% of this amount. If Halifax pay you 1% of the same value, then you are no worse off

I think it's the contract and transfer deed that need changing.

This makes interesting reading on this topic
https://www.whatdotheyknow.com/request/gifted_deposits_2

and we have a Land Registry rep who posts on this forum - perhaps they can help further.

Dave, cheers for the response...

Soo many conflicting pieces of information out there
Mortgage broker and Halifax are saying that the purchase price should go down as £173,700, but Solicitors are saying it should be £193,000.

Am I within my rights to ask my solicitors to amend their purchase price? Or am I just better off trying to find the money to pay the additional £193?

Cheers
Gavin

fatmcgav

And now the solicitors are saying that legally, they can't change the purchase price recorded on the Contract/Title Deed?!

Time to raid the sofa to try and find some additional money

Unless anyone else has any ideas?

Cheers
Gavin

Thrugelmir

What amount is SDLT charged on?
SDLT is charged on the total amount of what's known as 'the chargeable consideration'. The chargeable consideration includes everything of economic value given in exchange for the property - so as well as a payment of money, it can include a release from a debt, the transfer of an existing mortgage, or the provision of other services.

In your case the deposit.

If stamp duty wasn't charged on the full value of the property. Then the system would be open to abuse. Selling assets at under value, then receiving further consideration in full settlement after the the event.

The Halifax's view is understandable due to the fact that cash has passed hands.

If you cannot raise a £193. I hope that your finances are in good shape to take on the commitment of a mortgage and all the costs that accompany home ownership.

holly_hobby

No there's lots of confusion here.

Both your Mge broker and Halifax are correct (& Dave the Cat x).

The pch price for processing a family discounted pch under Halifax's mge processing (and indeed any mge lender whom accepts such applications), is always a pch price equal to market value ie 193k, with the mge reqd the agreed amount between the 2 to pch the dwelling, ie in this case £173,700 - but this is purely from a mge processing point of view, in order to demonstrate the actual LTV for keying and underwriting purposes as £173,700/£193,000 = 90% LTV.

However, essentially 193k is NOT the actual pch price for SDLT or reporting purposes (with any gifted equity not recognised as consideration under SDLT regs), with the actual pch price for reporting purposes (ie HMRC and LR) being the £173,700, which is the sole consideration exchanged for transfer of ownership, as Halifax and your Broker have correctly stated.

SDLT relates to consideration (which can be monies paid in exchange for ownership of a property OR where no monies exchange hands, goods, services, tsf of debt inc existing mges) in exchange for property ownership.

In this case, this is a straight forward purchase, with a monetary exchange in respect of the TOE of £173,700 (which is THE consideration as it is not part of linked transactions between the parties) - which equates to £1,737 SDLT.

If this was not the primary residence of the parents, this is where in respect of CGT, the liability would be assessed on the actual market value, but we're not talking about that, we're talking about SDLT, for which the important calculating fig here is £173,700.

Accordingly the mge offer doesn't have to be changed, the 1% of £173,700 (the actual pch price) and being provided by Halifax under their SDLT scheme is correct, its the Solicitor whom needs to amend their figs for reporting.

I can only assume the conveyencer has had no exposure re family discounted pchs ... although this is largely the same process as with Right To Buy purchases.

Where under a RTB the registered pch price for SDLT and reporting purposes, is that net of the tenants discount, not what the actual market value of the property is pre discount. (With the mge application submitted as per family discounted/concessionary pch as described above, ie market value as pch price, discounted pch price as the mge reqd - difference in values acting as deposit)

Perhaps if you use the RTB example with your conveyencer and explain in those terms, they will understand the reporting process (although different basis of pch) is essentially the same.

But to conclude, yes your SDLT liability is correct at £1,737.00 (ie 1% on £173,700).

Hope this helps

Holly

Dave_the_Ginger_Cat

The other thing to bear in mind in all of this is that these type vendor gifted deposits, particularly family transactions are not always welcome at high street lenders. Essentially you've not had to raise a deposit or stamp duty. As one who sets policy for a large lender, this does not sit well with me.

I guess I am saying you were fortunate this is currently in policy/vogue, as else you'd have had more trouble to find a mortgage.

Suggest asking your conveyancer to amend their papers. They can amend them, it's just a pain.

ViolaLass

It's quite frightening to hear that you haven't got £193 spare. What if a bill comes up in the next month?

holly_hobby

Dave_the_Ginger_Cat wrote: »

The other thing to bear in mind in all of this is that these type vendor gifted deposits, particularly family transactions are not always welcome at high street lenders. Essentially you've not had to raise a deposit or stamp duty. As one who sets policy for a large lender, this does not sit well with me.

I guess I am saying you were fortunate this is currently in policy/vogue, as else you'd have had more trouble to find a mortgage.

Suggest asking your conveyancer to amend their papers. They can amend them, it's just a pain.

Vendor deposits (gifted equity or cashback) are no longer accepted right across the board (in fact Halifax were the last to pull out of this market sometime ago).

Family Discounted Purchases remain permitted - BUT the family member must be classed as immediate, and not all lenders will work on the market value, but will base the LTV on the ACTUAL pch price, which of course means if there's no extra pennies for deposit the client would essentially be looking at a 100% mge.

So... back to the plot, Halifax (along with a number of other high st names) do continue to accept FDPs basing their underwriting and lending on market value/discounted pch price (sometimes referred to as Concessionary Purchase) - with the difference effectively acting as the deposit.

As I say, along with H. there are several lenders whom remain comfortable with this arrangement, with an experienced broker being aware whom they are.

Hope this helps

Holly