Purchased New Build before Stamp Duty Changes announced but property wont be built in time

SSM1994

I was wondering if anybody is in the same boat.. 

Just a bit of background info, me and my partner have been together for 6 years, I'm 30 and she's 27, both work in London earning reasonable salaries, we've lived in a rented 1 bed flat outside of London for the the last 6 years whilst we saved money to buy a property together.

We brought a Bellway New Build back in August 2024 however the property will not be built until Q4 of 2025. 

As first time buyers we wanted to make the most of the nil-rate threshold on stamp duty so we based our search on properties up to £425,000.

Our initial thoughts when the Government announced the stamp duty changes were 'thank god we purchased when we did!' however after a couple of weeks we realised that in fact we're actually going to have to pay the tax.

Our solicitors who were recommended to us by Bellway (mistake we wont be making again any time soon, absolutely useless) haven't provided us with any kind of support on this other than tell us we'll have to pay (Roughly £4,000).

This is money we haven't got and are unable to save/borrow so I'm unsure as to what we are supposed to do. We're unable to pull out of the purchase, not only will we lose our full deposit but also been told we'd have to pay compensation to Bellway for pulling out.

We'll be doing everything we can to raise the money, no holidays, no events, no going out for meals or takeaways etc, definitely going to be a year to forget! 

What also doesn't help is our companies have now also requested we return to the office full time so any savings we make by doing the above is completely lost in train tickets.

I suppose it just hurts a lot as, like most people, we've worked hard, lived within our means and done everything by the book to get us to this point, how is it fair that the Government can change the goalposts?

We've spoken with Bellway about this, we thought the fact we've signed all the documents, exchanged our deposit, basically we're just waiting to receive the keys, this would mean we've already completed so therefore aren't liable to pay the tax, but they've told us we haven't fully completed until the property is fully built and we've received the keys.

Just seems completely unfair, surely this isn't right? 

If anyone has experienced anything similar or is currently going through the same it would be great to hear how you are dealing/ have dealt with this.

DE_612183

have you bought the property - ie sale has completed ( and you have handed over the £425k ) or have you just reserved the property?

SSM1994

DE_612183 said:

have you bought the property - ie sale has completed ( and you have handed over the £425k ) or have you just reserved the property?

Being first time buyers sorry in advance for my naivety and if I've left out any info that hasn't made this clear. We've taken out a mortgage so we have parted ways with our 10% deposit which either the solicitor holds or has already been sent to developer (unsure exactly how it works but bottom line is we've paid the deposit and there is no way of us getting this back), we have to keep renewing our mortgage offer every 6 months to prove we are still in a position to purchase the property.

Correct me if I'm wrong but I'd assume the lender wont send the money to the developer until we actually move in.

Hope this answers your question!   

user1977

If you exchanged contracts before the Budget announcement then you’ll pay SDLT under the “old” rules.

Apparently nonsense, please ignore!

DE_612183

ok, so it sounds like you have not actually "bought" the property - you have mearly paid a deposit to the developer - ie it's not legally yours yet.

Therefore Stamp Duty becomes due when the transaction takes place - so if it's after 31/3 the new rates will apply.

You could ask the developer if you were to pull out would they refund the deposit it full - they could if they wanted to.

regarding the actual amount and your inability to pay it - I'm surprised that you have left yourself open to such risk - if a £4k bill can throw you this much - and you've had a number of months to prepare for thia - what happens if any other life event hits you? how will you cope with the mortgage and living?

SSM1994

user1977 said:

If you exchanged contracts before the Budget announcement then you’ll pay SDLT under the “old” rules.

That's what I thought would make sense however our solicitor and Bellway seem to think otherwise.

We've exchanged contracts but they are saying we haven't completed until the property is fully built.

If we are unable to pull out without losing our deposit and also have to pay Bellway compensation then it just seems completely unfair that we have to pay stamp duty under the new rules. 

SDLT_Geek

user1977 said:

If you exchanged contracts before the Budget announcement then you’ll pay SDLT under the “old” rules.

If only!  That is the rule for many transitional rules under which SDLT increases take effect.  Different rules apply to the end of a "holiday", which is what is happening on 1 April 2025.  I will look out the guidance, I think it was with the 30 October 2024 budget papers.

sheramber

user1977 said:

If you exchanged contracts before the Budget announcement then you’ll pay SDLT under the “old” rules.

That concession only applied if  exchange was before the budget announcement and completion was by 31 October. 24.

Completion must be by  5 April 25 to pay the old rates.

Completion after 5 April is at the new  rates.

user1977

sheramber said:

user1977 said:

If you exchanged contracts before the Budget announcement then you’ll pay SDLT under the “old” rules.

That concession only applied if  exchange was before the budget announcement and completion was by 31 October. 24.

Completion must be by  5 April 25 to pay the old rates.

Completion after 5 April is at the new  rates.

I stand corrected!

Myci85

user1977 said:

If you exchanged contracts before the Budget announcement then you’ll pay SDLT under the “old” rules.

Apparently nonsense, please ignore!

I thought I read somewhere that this was true, that if you exchanged before the budget announcement then the old stamp duty rules would apply? 

£4k is a lot to find as a first time buyer, I think some people are a little out of touch with just how hard it is to save money up these days whilst renting, even with two full time salaries. 

Kim_13

It looks like you have exchanged but not completed. Stamp Duty has always been a tax calculated at completion.

Could you explain the situation to your employers and see if there is any movement on the full time return to the office? If you were going to be in a position to walk to work from the house, then that’s better for them as there would no longer be a risk of your being late or unable to get in due to train delays/cancellations/strikes. But you can’t push too much as you wouldn’t have a mortgage in place if you lost your jobs, so would then be certain to lose all the money.

Do you have a good relationship with your LL and could possibly get your deposit returned in time to use towards the Stamp Duty? If you can’t be gifted the £4,000, is there anyone you could move in with temporarily in order to save the rent for the Stamp Duty?

Paying the stamp duty yourselves would give you the longest time to pay it, but the solicitor is likely to want it upfront.

You could write to your MP highlighting the impossible position the changes have left you in, especially if there is no chance of finding the money through any of the above avenues. There’s time for them to change the calculation to the rate applicable at exchange if there was the political will to do it. 

First Time Buyer error perhaps (or the result of waiting 6 years to get to this position), but August was literally the worst time to agree to buy a house with a delay. The change of government was not only likely but known, and that government were going to do a budget in which it was highly likely that SDLT would change. That can mean savings but it can also increase, so not something to be doing if you don’t have a contingency.