House valuation for asset following divorce

Bonzo1976

Hello all,

I am currently going through a divorce and we have had an average house valuation of £375k.
Without going into the finances too much my wife's solicitor has taken 3% of the total house value off the assets to be split and has informed me that this would be the cost of sale for the house, stamp duty etc.

My wife is buying me out of the house but is staying there to live.

My query is this. My wife is staying in the house so why should half of the house sale come off the total assets??

I have gone back to her solicitors regarding this and they just said 'regardless of whether the house is sold or not the cost of sale figure is taken into account, normally 3%'

Thanks in advance for your thoughts

gizmo111

The only costs will be legal fees, there is no stamp duty on transfer of equity Stamp Duty Land Tax: transfer ownership of land or property - GOV.UK (www.gov.uk)

VyEu

For a 'buy out' option, no there's no 3% cost of sale fees (3% is standard). Just write back (or via your sols) and say that given that the costs of sale won't actually be incurred, there's no reason for them to be taken into account. 

Note: Haven't seen any other financial disclosure from either party so have no idea whether whatever you're thinking is fair etc. always seek your own independent legal advice i.e. your own solicitor

tightauldgit

The value of the equity is the market value of the house less outstanding mortgage less the costs of sale so yes it seems right to deduct the 3% regardless of whether it's actually incurred or not. 

TBagpuss

It's absolutely normal to take into account notional costs of sale - even where one party is buying out the other, as the court looks at what the situation would be is the property was being sold and you were each getting a share of the property. And as in order to realise the value of the property, the person staying there will eventually need to sell and will incur those costs.

You can however sometimes negotiate on the percentage - 3% is a bit high, I'd suggest using 2% but if the norm in your local court area is 3% then you may be stuck with that. It is what's in national guidance, you can argue for a lower figure if the reality in your area is that agents charge 1% or so and legal costs will rarely be that high 

Exodi

I found myself at a similar quandary a couple of years ago, though I was the other party in your scenario.

First thing to mention is that a Transfer of Equity isn't free. Digging out my completion statement for the transfer, I was charged:

Solicitor Fee: £780
Telegraphic Transfer Fee: £36
AML Fee: £24
Land Registry Fee: £40
Land Registry Office Copies: £27
SDLT Admin Fee: £3.60
AP1 Admin Fee: £3.60
-----
Total £914.20

This was at the start of 2021 for a house worth approx £300k. There may have also been a 'Change of Parties Administration Fee' of £125 from Nationwide, but I can't see how this may have been charged.

As your house is worth a bit more and we are 2.5 years on with pretty big price increases, the Transfer of Equity might cost £1.5k (but obviously depends on solicitor, location, etc). Obviously 0.4% =/= 3% but my point is I don't think it's reasonable to consider the costs to be nothing.

In my situation, I had offered to buy my ex out and I was stuck in thought over the same predicament - if it's sold on the open market, she would receive 3% less (or whatever % you agree is reasonable in respect of the selling fees) however, on the flip side, it didn't seem fair to discount her 3% when I am not incurring that cost.

In my situation, I didn't even try my luck (I just settled paying her the equity assuming no costs). Unfortunately her dad heavily influenced her decisions regarding the buyout, even telling her that she shouldn't even pack her bags until she has every penny from the buyout in her bank...

You can imagine the frustration after having sent the money to the solicitor and the transfer being out of my hands, and still my ex remained steadfast that she would not leave the house. Eventually the solicitor spoke to her that they required her vacancy and that the funds were in transfer.

On top of this, an estate agent was brought round whilst I was out and the estate agent estimate was cited to me as the value of the house. As is sometimes common of estate agents as a strategy to win business, it was higher than any of the recent sold prices of similar properties. Despite this, I was happier unfairly paying a few grand (I estimate that I overpaid approx £10k in total), than continue the current situation with us living together.

As to your circumstances, I'd suggest negotiating downwards and be open to compromise (perhaps offering 1%).

Do you not have a solicitor?