No question - just need to vent about my AWFUL vendor!

BluecoatRob

Hello

As above, there's no question here - I just need a place to vent my frustration and figured some of you might appreciate a good rant!

My partner and I are in the process of buying our first house. We started looking in 2019, but between Covid and assorted bad luck (including two collapsed sales) it's taken three years and counting. We found a property last year and made an offer, which was accepted in September. Offer was well above asking, but the property is vacant and our rental is for sale, so the clock is ticking.

Since then: surveys are done, searches are back, mortgage is approved, contracts are signed, and 99% of our enquiries have been answered. We've informed the vendor that once the last couple of enquiries are back we can complete, and essentially everything is ready to go in the next week or two.

However... late on Friday our solicitor received an email from the vendor's solicitor saying that: following advice from their accountant, the vendor would like to transfer the title to their partner, as this would reduce their capital gains tax bill. Their solicitor has informed them that this could add a considerable delay, but their minds are made up apparently, and the solicitor has produced the deed for them to sign.

Our solicitor explained to us: for them to register the change at the land registry could take anything from a few weeks to six months (and the estate agent confirms it's a bit of a lottery at the moment). On top of that, our mortgage conditions state that the property can't have changed hands in the last six months, so once the transfer is registered there could be another significant delay. It may be that we can expedite the transfer and figure things out with our lender (or find another lender) but that's far from certain. Worst case we could be looking at up to a years delay.

So we've gone from potentially moving next week... to now potentially having to wait six months or more... because the vendor has decided at the eleventh hour to minimise their tax bill...

Infuriated does not come close to capturing how I'm feeling right now!

We've asked the estate agent to impress upon the vendor just how major an issue this is this close to completion, and our solicitors have done the same. We now have to stew for the weekend until we hear back from them, and fingers crossed they see sense, because if they proceed with this we'd have little choice but to pull out. With the threat of eviction hanging over us we need to find a place to live, and I don't see how we could trust them not to scupper things again in six months time.

Sigh... this whole process it feels like every turn we take we run into obstacles, most often caused by clueless sellers. The frustration and worry is killing me right now. 

Snookie12cat

Everyone needs a good rant! Depending on the value, I suppose the saving could be a lot if he is a HRT payer, but the fact that they only considered this at the 11th hour is a joke! 
I hope they see sense and it works out for you. 

Owleyes00

What a nightmare.

The LR does seem to be a bit of a lottery though atm. People on here posting often about months to a year. We completed beginning of December, LR was updated 13th Jan 🤷🏼‍♀️

canaldumidi

BluecoatRob said:

......
However... late on Friday our solicitor received an email from the vendor's solicitor saying that: following advice from their accountant, the vendor would like to transfer the title to their partner, as this would reduce their capital gains tax bill. .......

Do you know if the partner is a civil partner?

I imagine the thinking here is that by 'gifting' the property to partner, there is no money received so no gain/profit, so no Capital Gains Tax. However I think the advice they've received is very dodgy!

I note on the gov website:

Market value

In some situations you should use the market value of the property when working out your gain. Do this if:

• it was a gift (there are different rules if it was to your spouse, civil partner or a charity)

So far so good. The current owner does not need to use market value to calculate their gain if gifting to civil partner, and can use the £0 value of the gift. However, the link then says:

If they later sell the asset

Your spouse or civil partner may have to pay tax on any gain if they later dispose of the asset.

Their gain will be calculated on the difference in value between when you first owned the asset and when they disposed of it.

So whilst the current owner avoids CGT, their partner will pay it. True - the partner's CGT rate may be lower, if on a lower income, but the difference in amount won't be anything like as great. Really worth the hassle? Potential loss of their buyer? Extra costs of maintaining the property for an extended time?

Hard to say without exact figures but seems unlikely.

Slinky

Is it a complete transfer of title from vendor to partner, or are they adding their partner to the title thereby utilising 2 CGT allowances.

I wonder why they are not just relying on PPR.

canaldumidi

Slinky said:

I wonder why they are not just relying on PPR.

OP said: "the property is vacant " so perhaps it was let out? 2nd home? Inheritance that was left empty?

Trouble is the OP only knows what they are told, which could be inaccurate or only part of the story, but it does seem an umlikely scenario...

Bendy_House

BluecoatRob said:

and fingers crossed they see sense, because if they proceed with this we'd have little choice but to pull out.

Hellish for you, Rob.

However, if the highlighted part above is actually true - you would pull out of the purchase should they go for this potentially prolonged delay - then that is also surely your answer? Ie, you tell them in advance that will happen should they dally. But you have to mean it.

Is the market levelling off/slowing down where you are? If so, it would take a brave/foolish vendor to not be given pause.

BluecoatRob

Hello again

Thanks for all your comments, it's nice to know I'm not alone in my frustration!

canaldumidi, that's really interesting to hear, and something I'll be sure to point out to them if it comes up.

My understanding is they are adding their partner to the title - sorry, should have been clearer - so presumably using two personal allowances. They bought for £66,000 in 2014 and we're buying for £135,000, so there's a gain of £69,000 (maddening that you can double your money in a few years doing nothing with property, but that's another rant!). They've been renting it out, so it's a second property.

I don't know enough about CGT (or their personal finances) to know how the saving would work out, but I'm guessing perhaps in the region of a £10K saving.

At the risk of losing your buyer? Who knows, it's up to them really. As Bendy_House says, all we can do is make it crystal clear to them how unacceptable a delay would be and hope that they change their minds. Absolutely maddening mind, to get this far (twice) only to have the rug pulled.

aoleks

You’re looking at 12+ months to get anywhere closer to buying. Not the advice you wanted, but start looking for a new house…

Bendy_House

Have you exchanged contracts yet, Rob? Completion date agreed? I don't suppose your conveyancer can advise you whether you have any comeback due to this fully avoidable delay - ie recover your solicitor's costs from the vendor at least? That would be an added incentive if so.

Andthen07

Walk away, in fact run very fast.

There will be another property.