1 week between exchange / completion dates - mortgage and stamp duty implications?

Maidavale

Hello

So I have found myself caught up in the recent property frenzy here in Bristol and after listing my property received (8!) offers and have accepted one to go under offer - they do however have a chain under them.

I have found a property I would like however there is considerable interest so I am going to need to make myself stand out and I worry that chain will make me look unappealing.  This may mean offering to be a cash buyer (which we have the means to do on a short term basis although did not really want to use up all my funds - however i may not have a choice), exchanging and completing on my purchase first and 7 days later exchanging and completing on my sale.  Keeping them separate by a week will hopefully make me a very appealing cash buyer without any of the risks of my sale.  My two questions are:

1. Given I would complete on the new house before the old house sells, I would incur the 3% extra stamp duty.  I know the solicitor has 14 days to pay this.  If I within 7 days I subsequently complete on my existing home can I avoid the extra charge?  Or regardless of how short a timeframe do I have to pay the extra 3% and claim it back at a later point.  I guess the question is does the solicitor have flexibility in that two week window if they know I will end up with only 1 property from the 2?
1. Does anyone know if i can port a mortgage in such a scenario - basically it would classify itself as porting a mortgage from a property being sold to a property I would have owned for 7 days  - i.e. it's not being ported on purchase day - but 7 days after this.

Thank you for any insights!

(One overwhelmed buyer)

SMR710

I'm unsure how you can be so confident about the 7 day window between purchase then sale!

NinjaTune

If you are 100% sure that your sale will go through within 7 days of your prospective purchase then why not complete/exchange on both on the same day?  I honestly don't see how one week is going to make a huge difference in terms you being an 'attractive' buyer.  If you were talking about one month then I would understand, but 7 days?  How much of a rush is your vendor in?

[Deleted User]

I can understand what you are trying to do, although it may complicate things more by trying to aid things! From what I understand, you would definitely get the stamp duty refunded (I think it's fairly prompt as well) but it may well need to be fully paid and then fully returned. With mortgages, I think some companies accept non-simultaneous porting as you are describing but I think it's down to individual circumstances so you'd need to chat to the lender. Good luck!

heston2014

In response to (1) - if you sold your first property within 3 years, you can get a refund for the additional stamp duty.  Check it out on gov.uk.
In the interim you will own two properties, pay additional 3% on second property. Once you sell first property you claim the stamp duty back.  Stamp duty is payable within 14 days, but your solicitor may pay it as soon as you complete the purchase, so I personally would go for the refund route.

allconnected

You don’t have to pay the extra 3% stamp duty if you meet the conditions for not paying it by the time the stamp duty is due and payable, even if you were liable to pay it on the day of purchase.

so if you buy a house on which the 3% is due because you still own an old residence and sell that previous residence within 14 days, you don’t need to pay the extra 3% at all.

Allconnected

SDLT_Geek

allconnected said:

You don’t have to pay the extra 3% stamp duty if you meet the conditions for not paying it by the time the stamp duty is due and payable, even if you were liable to pay it on the day of purchase.
so if you buy a house on which the 3% is due because you still own an old residence and sell that previous residence within 14 days, you don’t need to pay the extra 3% at all.
Allconnected

Allconnected is right.  You will need your conveyancers "with you" as they have duties to the lender to get the return submitted and the SDLT paid.  They will need to be "in funds" from you to pay the extra 3% in case your sale does not go through in time, but they should be able to refund you if your sale does go through in time.  So with a bit of understanding you should be able to rely on HMRC's concession for this kind of case set out here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09805 

The key wording is: "In the case of a disposal of a previous main residence following a purchase of a new main residence, the land transaction return must be made based on the higher rates of tax, unless the disposal occurred before the date on which the land transaction return for the purchase must be submitted.  In such a case the land transaction return can be completed as if the higher rates do not apply."

davidmcn

SDLT_Geek said:

allconnected said:

You don’t have to pay the extra 3% stamp duty if you meet the conditions for not paying it by the time the stamp duty is due and payable, even if you were liable to pay it on the day of purchase.
so if you buy a house on which the 3% is due because you still own an old residence and sell that previous residence within 14 days, you don’t need to pay the extra 3% at all.
Allconnected

You will need your conveyancers "with you" as they have duties to the lender to get the return submitted and the SDLT paid.

Even easier here as it'll be a cash purchase.

I'm less convinced that "porting" in these circumstances is going to be easy - non-simultaneous porting normally involves the sale completing first before a normal purchase with the mortgage. Here it's a cash purchase and then a refinance very shortly afterwards. Lenders generally dislike lending if the owner has owned for less than six months. There may be options available, but obviously the OP is stuck with their current lender so depends what their attitude is.

It would be easier to redeem the existing mortgage with cash simultaneously with the purchase (using mortgage funds) if the sums allow that.