Stamp Duty & 'Consideration' on buying for under value

TrickyDicky101

erin110 wrote: »

It depends on how much you buy it for and how the lender sees it. So if a lender puts the value down as £500k and that is how much you are purchasing for and lending then your stamp duty will be on the £500k. If the lender believes the value to be £800k and you are being gifted the equity and only borrowing £500k then you will be charged on stamp duty on £800k. You need to speak to the lender to clarify. Is your loan to value, 100% or 63%?

Garbage...

da_rule

erin110 wrote: »

It depends on how much you buy it for and how the lender sees it. So if a lender puts the value down as £500k and that is how much you are purchasing for and lending then your stamp duty will be on the £500k. If the lender believes the value to be £800k and you are being gifted the equity and only borrowing £500k then you will be charged on stamp duty on £800k. You need to speak to the lender to clarify. Is your loan to value, 100% or 63%?

While the lender needs to be satisfied that there is enough money to pay the SDLT they are not the source for working out the taxable value. Otherwise, back in the days of 110% mortgages people would have been paying stamp duty based on a value that was more than the property was worth.


In this case the SDLT is based on the actual consideration. The £300k will be treated along the same lines as a gifted deposit. They are being asked to lend £500k against a house that is valued at £800k.

BlueIsTheColour

I've just completed on a concessionary purchase, where the house was valued at £230k, my mortgage is £130k and the £100k was in essence 'gifted' to me by the owner of the property. (In my case, my father in law as I was a sitting tenant having lived there with his son who unfortunately recently passed away).

My SDLT was only £100, based on the £130k mortgage/cash the owner received. (My mortgage company have still worked on the value of £230k for the LTV)

Sasahara

getmore4less wrote: »

The problem is the lender won't lend on that basis.

The lender will only want to make sure the parent have no interest in the house after the sale. So the only parties that have an interest in the house will be the mortgage lender and the OP.

That would include not having an agreement for the parents to live in the house.

The OP has said nothing on this subject or if (s)he intends not to live in the property. If the OP isn't going to live in the house a BTL mortgage would be required, and there would be added complications if the parents were the occupiers.

Anything else will have no interest to the lender.

davidmcn

Thrugelmir wrote: »

To protect the lenders interests. A very basic security check.

Can you explain in what way their interest would be adversely affected? Is this just one of these "vaguely associated with fraud" indicators?

getmore4less

Ask HMRC for the manual pages that support their position.

getmore4less

Sasahara wrote: »

The lender will only want to make sure the parent have no interest in the house after the sale. So the only parties that have an interest in the house will be the mortgage lender and the OP.

That would include not having an agreement for the parents to live in the house.

The OP has said nothing on this subject or if (s)he intends not to live in the property. If the OP isn't going to live in the house a BTL mortgage would be required, and there would be added complications if the parents were the occupiers.

Anything else will have no interest to the lender.

The OP has already stated the lender is treating it as an £800k sale not a £500k sale

Sasahara

getmore4less wrote: »

The OP has already stated the lender is treating it as an £800k sale not a £500k sale

Not relevant to the OPs question, the sale price of £500K is what the Stamp duty will be based on. The lender has nothing to do with stamp duty.

All the lender will require is evidence there will be no other parties with an interest in the property. So the £300K reduction is a gift and not a loan or other arrangement where a payment or entitlement is required for it. If there is that's a completely different question.

The lender will value the property as £800K for LTV. (Assuming it gets that valuation) All they care about is not breaking any law and not losing money if the OP defaults.

If the parents gained something of value up to the £300K in addition to the £500K then it could be part of the sale price.

getmore4less

Sasahara wrote: »

Not relevant to the OPs question, the sale price of £500K is what the Stamp duty will be based on. The lender has nothing to do with stamp duty.
....

It is for the OP as the people he is dealing with(right or wrong) are using the lenders stance to determine the SDLT.

your suggestion the parents can sell for £500k won't work for them as their lender won't do that.

The OP needs to fix the understanding by the people he is dealing with, or change them.

ABBF08291

To provide further background, parents are moving abroad later this year, hence the sale. I already live in the property and will continue to live in the property with my wife, who will also be on the mortgage with me.

Parents will still be living in the property until they move abroad, and to satisfy the lenders requirements have signed a consent form waiving their rights to the property and also confirmed that the £300k equity is a gift and not a loan/arrangement.

My key problem lies with the broker assuming the SDLT is as per the lender/transaction details - i.e. on a valuation of £800k / LTV 63%. This is also the assumption that the solicitor is working on, while 2 further sources (HMRC and land tax advisor) both suggest 2 further different figures. What I am trying to find out is who has the final say?

SDLT based on £497k v £800k - It is a significant difference! If solicitor isn't willing to listen or change his stance, then either need to sack him off or tell him I'll pay SDLT myself to HMRC (who are the ultimate beneficiaries). If HMRC are telling me I owe them less than what the solicitor is saying then it makes sense for me to pay them myself or obtain written confirmation from them and send to solicitor (which is annoying as they will porbably take a few weeks to give me this).

Thanks all.