FTB offer advice- Seller Pays SD

Redguy17

Hi Again

Found another property I like and I need some advice. Property is an upper floor flat with loft conversion on for 130k, it is in Turn key condtion. I've offered 125k to try to stay under stamp duty, the agent has gone to seller and said sell for 130 but vendor pays stamp duty..? I did not realise this was an option anyone out there have experince with this ? Seems at bit dodgie to me or am I looking a gift horse in the mouth.

so effectively i'm paying 128750 for property. Seller bouth for 117k 10 years ago but has done no work other than maintance and decorating.

Thanks for your help.

benjus

I'm in exactly the same situation, but as the seller. I offered to pay SDLT in order to get the buyer to come up to £130k. Personally I think it's a good strategy - buyers get fixated on SDLT thresholds, so removing them from the equation is a useful psychological tool.

I don't think there's anything dodgy about it - the seller is essentially giving you the SDLT money as a gift (which doesn't attract tax) and you (via your solicitor) pay it to HMRC - so no tax avoidance going on.

However, you may need to declare it as an incentive on your mortgage application.

Yorkie1

Many lenders do not like this arrangement - vendor gifted deposit - and some will refuse to lend at all. Others, I believe, may completely discount it from the value of the property and so lend less.

One of the brokers will confirm later, hopefully.

mrginge

Pointless gimmick likely to be chucked out by mortgage lender.

mrginge

benjus wrote: »

However, you may need to declare it as an incentive on your mortgage application.

There's no MAY about it.
To not declare it would be mortgage fraud, since it is effectively a backhander used to inflate a mortgage.

ethank

Some lenders view this as cashback and minus it from the advance.

F_Bear

+1 with mrginge. your mortgage lender will decline. we had exactly the same problem in dec. house up for 135k and we offered £130 and the pay stamp.

all providers said no to gifted depoist. ended up paying 128700. funny thing was the estate gaent complained about losing £13 comission!

kingstreet

Any cash incentive like this will be deducted from the valuation by the surveyor, so it will end up as a price reduction, either way.

Redguy17

Thanks for all the replies. Seems like it will all depend on what the lender has to say about.I'll ask broker next week .I'm going with nationwide anyone know how strict they are about these things ? The borker did not want to add stamp duty to the loan as they can't lend me tax. I just wish agent had not suggested this as it has muddied the waters and now sellers are seeing ££ signs. is 13k of equity fair over a 10 year period in this market? House is in the North Tyneside coastal area.

anselld

Redguy17 wrote: »

I just wish agent had not suggested this as it has muddied the waters .

It is a shame you even gave the agent the hint that this might be on option. Would have been better to say "No way. £125k take it or leave it."

Redguy17

anselld wrote: »

It is a shame you even gave the agent the hint that this might be on option. Would have been better to say "No way. £125k take it or leave it."

Oh the joy of hind sight. I agree Anselld wish i had, i'm a FTB not good at haggling but i guess i'm in the right place to get schooled:D Putting down to a leasson learned. Don't let estate agent talk you into something your unfarmilular with.:mad: Gutted as wife loved the place.