Is this legal - yes, says the estate agent!

mindovermatter

Hi,
I want to buy a house currently marketed at £280000.
I am in a very stong position in that the house has been empty for some time, needs some work and I am not in a chain (cash buyer).
Viewed it yesterday for the second time and willing to make an offer of £249,999 to avoid the stamp duty threshold.
I mentioned my thoughts to the estate agent who stated that the vendor was looking for a minimum selling price of around £260000 but that I should offer the £249,999 and pay his agents fees which are about £4000.
I asked if this is legal to which the agent replied 'yes - we've done it before' to which i replied 'you have'nt answered my question - is this legal?!'.
Does anyone have any views - I dont' want to end up being accusing of trying to fiddle the taxman.
Kind regards
Mindovermatter

thesaint

I would say 'Yes', but you should call HMRC for conclusive advice.
I wouldn't want you to end up sharing a compact and bijou jail cell due to advice given by a stranger on the 'web'.

lynzpower

two things

Are you a GENUINE cash buyer? Ie do you need any type of finance or do you have the money sat in the bank? If you do your agent should be asking for Proof of cash and thus THIS will be the leverage you need, given that a cash buyer can exchange within days.

Second, no its not legal. the HMRC have ben prosecuting EAs for this. When people suggested it to the EA where I worked the answer was "under no circumstances would we do this, its just not worth the inevitable prosecution"

Some EAs are more unscrupulous.

ds1980

just stick to your offer. say thats what youve got and thats as much as you'll pay. Youll complete within 28 days and if they don't come back to you move on. I bet that they will!

mindovermatter

I have been in touch with my solicitor who advises me not to do this - it could be classed by the taxman as 'evasion' rather than 'avoidance'.
I have now put the offer forward and the estate agent now states that there is another interested party - I don't believe them for a minute. So waiting at the moment to hear back.....
Mindovermatter

Guy_Montag

SO much for the estate agent working to get the best price for the seller. What a !!!!.

benood

I expect this is a grey area of tax law, quite a good idea in fact. If you contract with the agent to negotiate on your behalf to buy the property from the vendor (finders fee) then the agent's fee becomes part of your costs and stamp duty would not be payable. The vendor would have to have terminated their contract with the agent some time previously - this is where the ruse no doubt could get sticky and might be subject to attack. For sure if you mention the idea to your solicitor they will advise against and may have some sort of obligation to blow the whistle on you - if you don't mention it you will probably be ok - but you will be on your own should HMCE get interested - you are paying the stamp duty so it will be you and not the agent who gets fined/imprisoned.

lisahobden

I've seen properties advertised just over the £250k mark, with the vendor willing to pay the stamp duty which applies to the part of the fee for over 250k, if you see what I mean. This is often openly advertised, so this must be legal?