Reducing offer on house late into purchase due to stamp duty tax

ForestOfSouls

Hello all,

Any advice appreciated. 

I found my dream home some months back (after over 50 viewings!) and we are nearing exchanging contracts. I loved the property so much I offered over 8% the asking price as a cash buyer.

For context, the vendor had the property valued at £380.000 but put the property on the market for £370.000 as they didn't feel comfortable asking the valuers price. I met them personally when viewing. It's a competitive market here (there's often bidding wars on good properties), but I believe the seller to be of kind nature who's main motivation was to find a serious buyer who was right for the house and not to squeeze as much money as they could from the market. They seemed quite disillusioned with the property market here (flaky buyers) and very motivated to sell as they have found a property to buy that's not in a chain.

Unfortunately I have found out from my solicitor from her report that I am going to need to pay the higher stamp duty tax rate when I believed I would pay the lower residential rate. This is going to cost an £12.000 or so I don't have.

I am afraid of losing the property, but one suggestion made to me has been to revise my offer for the house based on this. 

Has anyone here ever successfully negotiated this type of thing late on in a sale? If so do you have any tips on how I can approach it?

I really don't want to antagonise the seller, but I could for instance explain my situation and firmly offer £8000 less (I could just about stretch to this), apologising for this late development and inconvenience but reiterating my strong financial and motivated position. I'm just concerned they may think I'm pulling a fast one and tell me to get lost.

My brother thinks I should just be extremely firm about what I can now offer at this stage knowing I hold many of the aces.

My intuition is the seller would be a bit peeved as I already know they didn't want anything minor deducted from the survey but still accept as it would still be an offer 6% over the asking price. They could relist the property but be back to square one (losing time and maybe the property they want to purchase) and have a high offer that's not cash like mine (I have noticed quite a few Sold Subject to Contract properties going back on the market). The only concern is, if they put the property back on the open market they could get an offer higher than mine. Hard to say.

However I just know if I lost this property I would be devastated.

The only other solution is to borrow, and I really don't want to plunge myself into more debt as times are tough with cost of living but I guess that would be one way to secure the purchase.

Any thoughts welcome.

Thanks in advance

fackers_2

That’s a you problem and not a them problem.

Not fair at all on the seller for you to be playing the purchase like a game of cards so late into the purchase. Does the seller have an onward purchase that the funds will directly pay towards. Would this jeopardise sale if it were to be negotiated down. 


You’ve answered your own question too… 

ForestOfSouls said:

However I just know if I lost this property I would be devastated.

The only other solution is to borrow, and I really don't want to plunge myself into more debt as times are tough with cost of living but I guess that would be one way to secure the purchase.

Any thoughts welcome.

Thanks in advance

Jonboy_1984

It isn’t an issue with the property but your personal tax circumstances*, so your problem to solve not the vendors I would say.

*Have you double checked that this is the case, as solicitors are not normally tax experts and sometimes play the cautious way.

_Penny_Dreadful

ForestOfSouls said:

Hello all,

Any advice appreciated. 

I found my dream home some months back (after over 50 viewings!) and we are nearing exchanging contracts. I loved the property so much I offered over 8% the asking price as a cash buyer.

For context, the vendor had the property valued at £380.000 but put the property on the market for £370.000 as they didn't feel comfortable asking the valuers price. I met them personally when viewing. It's a competitive market here (there's often bidding wars on good properties), but I believe the seller to be of kind nature who's main motivation was to find a serious buyer who was right for the house and not to squeeze as much money as they could from the market. They seemed quite disillusioned with the property market here (flaky buyers) and very motivated to sell as they have found a property to buy that's not in a chain.

Unfortunately I have found out from my solicitor from her report that I am going to need to pay the higher stamp duty tax rate when I believed I would pay the lower residential rate. This is going to cost an £12.000 or so I don't have.

I am afraid of losing the property, but one suggestion made to me has been to revise my offer for the house based on this. 

Has anyone here ever successfully negotiated this type of thing late on in a sale? If so do you have any tips on how I can approach it?

I really don't want to antagonise the seller, but I could for instance explain my situation and firmly offer £8000 less (I could just about stretch to this), apologising for this late development and inconvenience but reiterating my strong financial and motivated position. I'm just concerned they may think I'm pulling a fast one and tell me to get lost.

My brother thinks I should just be extremely firm about what I can now offer at this stage knowing I hold many of the aces.

My intuition is the seller would be a bit peeved as I already know they didn't want anything minor deducted from the survey but still accept as it would still be an offer 6% over the asking price. They could relist the property but be back to square one (losing time and maybe the property they want to purchase) and have a high offer that's not cash like mine (I have noticed quite a few Sold Subject to Contract properties going back on the market). The only concern is, if they put the property back on the open market they could get an offer higher than mine. Hard to say.

However I just know if I lost this property I would be devastated.

The only other solution is to borrow, and I really don't want to plunge myself into more debt as times are tough with cost of living but I guess that would be one way to secure the purchase.

Any thoughts welcome.

Thanks in advance

Are you absolutely positive that the higher rate of SDLT is due?  If so would you be eligible to reclaim the higher rate by selling a property that you must already own if the higher rate of SDLT is due?

You are of course free to do what you like as contracts haven't been exchanged yet. Personally, if I were your buyer, I would tell you to Foxtrot Oscar and re-market the property given the amount of interest previously.  

MultiFuelBurner

Are you a non UK resident if so stamp duty on £380k will be £14,100.

It's entirely up to you what you do and what you can afford.

Out of interest what were you thinking expecting stamp duty to total?

housebuyer143

This isn't really the sellers fault, but that being said I was in the exact same position as your seller with the same feelings and motivations and as much as I would have been really !!!!!! at you and probably not believed your excuse, I might have accepted it providing I could still do so and afford my onward purchase.

That being said, they could be easily tell you no, but again I doubt they would just refuse to sell to you at the original price if they did. What kind of person does that out of principal here? 

Personally I would be taking a personal loan for the difference and paying the stamp duty this way if it's your dream house and you are so concerned about losing it. Why is your solicitor saying the higher rate stamp duty is due?

 

anselld

How is it possible this late on in the process to realise that you own a second property?
Also, most solicitors give a breakdown of the full purchase cost estimate up-front.  Did this not show the expected SDLT at that stage?

babyblade41

I'm not sure where you are getting this figure from, my only clue is you have a second property .

If this is the case then you will have to find this from your coffers and not expect it to come from your sellers

If you can't then it looks like you could be devastated 

Loza2016

Is this a chain free property? Although the sellers will be annoyed they may agree to reduce the price. 

I’ve know of someone just last week who’s buyer reduced offer by 10k just before exchange. Seller was annoyed but agreed a 5k reduction as it was a probate property and they wanted the sale to complete. 

Noneforit999

You can ask whatever you like but I agree with others, I am not sure how you or the solicitor has only just discovered you are going to need to pay this extra SDLT. 

As a seller, I would like to think I would tell you where to go if you tried to do this to me, purely out of principle but ultimately it depends on their circumstances and if they are close to exchanging on an onward purchase.

You may find they cannot afford to drop £12k so they may have to say no.

As a vendor, I would know you have just as much skin in the game as I do money wise considering you have already spend money on conveyancing and likely a survey etc. I am the sort of person who looks at the situation and how invested the buyer is at this point and would simply play hard ball to begin with and only agree to a price reduction if I absolutely needed to and would push and push you for a while.

Flugelhorn

agree with others, might help to explain why you found yourself suddenly having to pay the higher rate SDLT? If it is because you have another property and are going to sell it then you will be able to claim it back at a later stage.
Otherwise pay or lose the property - it is definitely not the vendor's fault..

PS just a thought - buying a 370K property for cash and not have the spare 12K for the SDLT doesn't make sense - are you really using every bean for this house?  Perhaps you should look at cheaper places or get a mortgage