Stamp duty incentive on new build

AdrianC

Sweeney1 said:

daughter in same position. Not at exchange stage yet. Should she try to get solicitor to handle changing wording in contract with developer to say discount equivalent to stamp duty?

"The stamp duty due is £0. We can give a discount equivalent to £0... No problem."

OldMusicGuy

Sweeney1 said:

daughter in same position. Not at exchange stage yet. Should she try to get solicitor to handle changing wording in contract with developer to say discount equivalent to stamp duty?

No, because then the discount becomes zero if stamp duty is zero! You need to agree a fixed amount incentive which will then be described as "an £x000 contribution towards stamp duty" or something like that. Also, you need this in the contract when you exchange and you don't know what the stamp duty rate will be when you complete (unless you exchange and complete on the same day). So it has to be an agreed amount of money.

There should be an agreed amount on the reservation form, that is what you use.

SharkMoney

All mine says is

conditions of sale:

stamp contribution - £8000

im worried about the same thing. 

OldMusicGuy

SharkMoney said:

All mine says is

conditions of sale:

stamp contribution - £8000

im worried about the same thing. 

No need. £8k will be deducted from the amount you pay the developer for the house. The amount of stamp duty you actually pay is irrelevant (except to you of course!).

SharkMoney

OldMusicGuy said:

SharkMoney said:

All mine says is

conditions of sale:

stamp contribution - £8000

im worried about the same thing. 

No need. £8k will be deducted from the amount you pay the developer for the house. The amount of stamp duty you actually pay is irrelevant (except to you of course!).

Do you mean the amount I pay the solicitor? 

As far as I’m aware the asking price remains the same - we give the developer all of that money. 

However he then pays our solicitor £8k which will get swallowed up on fees and actual stamp. 

davidmcn

SharkMoney said:

OldMusicGuy said:

SharkMoney said:

All mine says is

conditions of sale:

stamp contribution - £8000

im worried about the same thing. 

No need. £8k will be deducted from the amount you pay the developer for the house. The amount of stamp duty you actually pay is irrelevant (except to you of course!).

Do you mean the amount I pay the solicitor? 

As far as I’m aware the asking price remains the same - we give the developer all of that money. 

However he then pays our solicitor £8k which will get swallowed up on fees and actual stamp. 

No, it will just be deducted from the net total you pay the solicitor. The money doesn't go on a merry-go-round.

OldMusicGuy

What davidmcn says. Everything is settled by your solicitor in one go. He/she produces a completion statement that shows what you need to pay covering anything going to the developer, stamp duty, other fees, solicitor costs etc. This will also include the mortgage (if any) which is transferred to the solicitor and any incentives from the developer are just a reduction of the amount you owe. The developer pays nothing, they just get less in total.

whizz2020

Cheers,
So best case scenario Rishi announces the Stamp duty holiday and implements it with immediate effect, the solicitor creates a completion statement, I assume the money the developer is incentivising us will just come off the total (as you said), but surely this would then change my deposit to less than 5% and the lender would need to get involved again.

As someone mentioned we have already had to go back to the lender to tell them of the incentives and increase our deposit to cover it so if our deposit gets reduced by £4k I imagine they are going to have an issue with that.

davidmcn

whizz2020 said:

As someone mentioned we have already had to go back to the lender to tell them of the incentives and increase our deposit to cover it so if our deposit gets reduced by £4k I imagine they are going to have an issue with that.

No, in your case nothing will be changing from your lender's point of view. You're getting a £4k incentive and your lender is already happy with that. Your costs for SDLT etc don't affect the LTV percentage. 

foxy-stoat

Just ask the developer to reduce the price accordingly, the sale price was inflated to include the discount anyway.