SDLT Increase

EssexHebridean

They CAN - that doesn't mean they SHOULD. @TheJP was (reasonably) saying that they didn't see why this should become the seller's responsibility. 

TheJP

mebu60 said:

TheJP said:

mebu60 said:

Yes. SDLT is at completion. 

You could try renegotiating the purchase price.

I don't see why the seller should stump up the cash to pay for the tax the buyer has to pay. Its the buyers responsibility to pay this tax not the seller.

The buyer would factor in SDLT at the prevailing rate when making the original offer and agreeing a price. If that goes up prior to exchange the buyer has the option of swallowing the increase or renegotiating the price. The seller does not have to accept the latter but then runs the risk of the buyer withdrawing. The original buyer would likely have made a lower offer had they known of the increased rate. Any prospective new purchaser will be factoring in the 5% rate prior to making an offer. It is the buyer's responsibility to pay it as you say but the buyer will have costed that in their calculations prior to agreeing a price. Prior to exchange the potential buyer can withdraw on a whim let alone because their costs have just increased. 

Only prospective buyers buying a second home would be factoring in the 5%, not a FTB or a sale & purchase buyer. If a buyer said they are offering £x due to the increase in tax then id say ok thanks but no thanks, The OP will either have to swallow up the tax increase or think carefully about buying a second home.

theartfullodger

Yes.  The country needs the money. 

mebu60

TheJP said:

mebu60 said:

TheJP said:

mebu60 said:

Yes. SDLT is at completion. 

You could try renegotiating the purchase price.

I don't see why the seller should stump up the cash to pay for the tax the buyer has to pay. Its the buyers responsibility to pay this tax not the seller.

The buyer would factor in SDLT at the prevailing rate when making the original offer and agreeing a price. If that goes up prior to exchange the buyer has the option of swallowing the increase or renegotiating the price. The seller does not have to accept the latter but then runs the risk of the buyer withdrawing. The original buyer would likely have made a lower offer had they known of the increased rate. Any prospective new purchaser will be factoring in the 5% rate prior to making an offer. It is the buyer's responsibility to pay it as you say but the buyer will have costed that in their calculations prior to agreeing a price. Prior to exchange the potential buyer can withdraw on a whim let alone because their costs have just increased. 

Only prospective buyers buying a second home would be factoring in the 5%, not a FTB or a sale & purchase buyer. If a buyer said they are offering £x due to the increase in tax then id say ok thanks but no thanks, The OP will either have to swallow up the tax increase or think carefully about buying a second home.

First sentence GPWM. But there's still the risk that if the current buyer suggests a reduction and the seller declines that an offer from a prospective future purchaser could still be lower whatever their status. And the time delay could risk the seller's own purchase.

mebu60

EssexHebridean said:

They CAN - that doesn't mean they SHOULD. @TheJP was (reasonably) saying that they didn't see why this should become the seller's responsibility. 

It's not the seller's responsibility, it is the buyer's. I was merely attempting to (reasonably) articulate that the SDLT amount that the buyer will have to pay will impact the seller in how much the buyer is willing to purchase the property for. 

In this real life case the OP is considering withdrawing which could cost the seller more overall than a few thousand off the price. There's also the possibility that if the OP withdraws the seller might even suggest a modest reduction in an attempt to save the sale. 

SonnyH

TheJP said:

mebu60 said:

TheJP said:

mebu60 said:

Yes. SDLT is at completion. 

You could try renegotiating the purchase price.

I don't see why the seller should stump up the cash to pay for the tax the buyer has to pay. Its the buyers responsibility to pay this tax not the seller.

The buyer would factor in SDLT at the prevailing rate when making the original offer and agreeing a price. If that goes up prior to exchange the buyer has the option of swallowing the increase or renegotiating the price. The seller does not have to accept the latter but then runs the risk of the buyer withdrawing. The original buyer would likely have made a lower offer had they known of the increased rate. Any prospective new purchaser will be factoring in the 5% rate prior to making an offer. It is the buyer's responsibility to pay it as you say but the buyer will have costed that in their calculations prior to agreeing a price. Prior to exchange the potential buyer can withdraw on a whim let alone because their costs have just increased. 

Only prospective buyers buying a second home would be factoring in the 5%, not a FTB or a sale & purchase buyer. If a buyer said they are offering £x due to the increase in tax then id say ok thanks but no thanks, The OP will either have to swallow up the tax increase or think carefully about buying a second home.

I guess the main frustration is the 'effective tomorrow' element. We're four months into a painfully slow buying process (the house buying/selling in England & Wales is dreadful for all parties, but that's a whole different thread and debate). To suddenly have the price changed is unreasonable (as a poster correctly pointed out, we'd factored tax costs in using the govt's own SDLT calculator). It's also very unfair to the seller if they end up back at square one if we decide not to proceed.

sammyjammy

In some ways the OPs reaction is what the government is hoping for, either more money in SDLT for the countries coffers or another house for a person to live in rather than have as a second home.  

michael1234

TheJP said:

mebu60 said:

Yes. SDLT is at completion. 

You could try renegotiating the purchase price.

I don't see why the seller should stump up the cash to pay for the tax the buyer has to pay. Its the buyers responsibility to pay this tax not the seller.

It is you are correct but the buyer can legitimately reassess whether or not the purchase still makes sense.

OP: If it was me, I think about suggesting the seller "meets me in the middle" re the extra 2%. i.e. he reduces by 1%. A risk if you're really set on the place but he has to weigh whether he really wants to go through the legals again in what might be a sinking market.

user1977

SonnyH said:

TheJP said:

mebu60 said:

TheJP said:

mebu60 said:

Yes. SDLT is at completion. 

You could try renegotiating the purchase price.

I don't see why the seller should stump up the cash to pay for the tax the buyer has to pay. Its the buyers responsibility to pay this tax not the seller.

The buyer would factor in SDLT at the prevailing rate when making the original offer and agreeing a price. If that goes up prior to exchange the buyer has the option of swallowing the increase or renegotiating the price. The seller does not have to accept the latter but then runs the risk of the buyer withdrawing. The original buyer would likely have made a lower offer had they known of the increased rate. Any prospective new purchaser will be factoring in the 5% rate prior to making an offer. It is the buyer's responsibility to pay it as you say but the buyer will have costed that in their calculations prior to agreeing a price. Prior to exchange the potential buyer can withdraw on a whim let alone because their costs have just increased. 

Only prospective buyers buying a second home would be factoring in the 5%, not a FTB or a sale & purchase buyer. If a buyer said they are offering £x due to the increase in tax then id say ok thanks but no thanks, The OP will either have to swallow up the tax increase or think carefully about buying a second home.

To suddenly have the price changed is unreasonable 

To be fair, that's what has always happened previously when stamp duty or other taxes increase at Budgets, so shouldn't be a massive surprise (hence the panicked attempts to conclude various transactions before lunchtime today....). There's got to be some sort of cut off date, it'll be "unfair" for somebody.

michael1234

sammyjammy said:

In some ways the OPs reaction is what the government is hoping for, either more money in SDLT for the countries coffers or another house for a person to live in rather than have as a second home.  

Ahh but its not usually a second home. The most common use case is a second property - i.e. buy2let. So that would be one less rental on the market. The person who might have rented that property is unlikely to be able to afford to buy. So as I see it the net effect is downward pressure on property prices (good many would say) and upward pressure on rentals.