One for the mortgage advisors, vendor paying the stamp duty.

ItsyBitsySpider

Hello all,

I hope someone could help me understand this. Is this possible for a vendor to pay the stamp duty on the property sale on a not newly built house.

For example, a house is sold for £278,000 the vendor pays £8000 thousand as tamp duty for the buyer. I have spoken to my mortgage advisor who is working on the commission basis, charging nothing from me and according to her, the lender won't have any problem with that as long as the market value of the property is equal to £278,000 and this is disclosed to the lender - makes sense.

However, on some forums people are of the view that the lender could evaluate the property at £270,000 and would only be willing to lend money based on £270,000 which also makes sense! But, if this is the case, how is this different from the newly built properties where it is quite normal for the developers to pay the stamp duty.

I have also discussed this my conveyancer and he is fine with it to go ahead, the cenveyancer works on the no-sale no fee basis.

My quesiton is what is the usual practice of the lenders generally. Has anyone seen similar thing happening, I recall seeing some property adverts online some time ago mentioning similar deals where the seller would pay a certain amount of stamp duty.

I will highly appreciate any positive contribution on this as I am genuinely trying to clarify this for myself ...

holly_hobby

SDLT is due and calculated on the consideration paid in exchange for the property (ie - in this case the amount paid for the house) - which will be £8340 (ie 275k @ 3%) - assuming it values up of course.

If the vendor has agreed with you a purchase price of £278,000, and the 8k they are providing, is neither a vendor gifted deposit (ie the 8k is not being reduced off the pch price), nor any kind of cash back arrangement to you, but will go directly to LR to pay the SDLT, then 278k is the relevant figure for both SDLT and your lenders purposes (re mge underwriting etc) - and as long as this is disclosed to the mge lender, as your adviser says, it'll be fine.


Hope this helps

Holly x

ItsyBitsySpider

holly_hobby wrote: »

SDLT is due and calculated on the consideration paid in exchange for the property (ie - in this case the amount paid for the house) - which will be £8340 (ie 275k @ 3%) - assuming it values up of course.

If the vendor has agreed with you a purchase price of £278,000, and the 8k they are providing, is neither a vendor gifted deposit (ie the 8k is not being reduced off the pch price), nor any kind of cash back arrangement to you, but will go directly to LR to pay the SDLT, then 278k is the relevant figure for both SDLT and your lenders purposes (re mge underwriting etc) - and as long as this is disclosed to the mge lender, as your adviser says, it'll be fine.


Hope this helps

Holly x

Thanks very much Holly Hobby for your reply. It is really helpful. Normally the buyer sends the stamp duty money in the solicitor's account before the exchange of contracts, what exactly happens in this case?

holly_hobby

The payment would be made to your Solicitor whom will in turn directly forward to HMRC (along with the additional £340 from yourself).

Hope this helps

Holly

ItsyBitsySpider

holly_hobby wrote: »

The payment would be made to your Solicitor whom will in turn directly forward to HMRC (along with the additional £340 from yourself).

Hope this helps

Holly

Thank you very much holly hobby. Does this mean that vendor has to deposit the stamp duty from their pocket with my conveyancer. They can't simply take the proceeds of the sale and use a part of it to pay the stamp duty. If that is the case, I guess we need to confirm this with the vendor as this is something they may not be aware of.
Many thanks in advance

holly_hobby

Your conveyencer will manage this.

Holly

ItsyBitsySpider

Thanks Holly, perhaps I am thinking too much about this

Cheers