Stamp duty and houses on at above threshold

Addy1

I know there are loads of "what shall we offer" threads, but this is really related to stamp duty.

the house we want to put an offer in on is on at 139k. We have researched it well and know the area cos we already live 2 streets away.

We want to get it for the cheapest price but have already worked out the we would be willing to pay asking price (obv not let on to EA!).

Basically it would be amazing to get it under stamp duty, but I think that is too much of a discount and I am petrified that they will think we are just playing games and will just walk away from us. At that price it would be undervalued in my eyes.

The question really is, do people consider the stamp duty threshold when putting at that sort of price? In which case they may be expecting to get offers at just below stamp duty threshold.
I have read on here that if your offer doesn't embarass you it is too high, but asking for more than 10% off seems really cheeky!

I would also be annoyed if we got an offer accepted of say, 127k as I would then be hit with stamp duty and it actually is like putting in an offer for an extra 4k rather than an extra 2 if you see what I mean?

seraphina

I would definitely offer under stamp duty - it will be pretty obvious to the vendors what you are trying to do - save yourself thousands!

I've found that it's not that properties are undervalued when they are below the stamp duty threshold - it's more that they are overvalued to get them substantially above the threshold, to avoild sellers trying to bargain under the threshold.

I would do my utmost to get it under the threshold. In this market I'd place an offer a few K below the stamp duty threshold and then you've got room to increase your offer and still be below the threshold - and remember, if you're not embarrased by your first offer, it's too high;)

Addy1

Thanks for this advice. Now just got to pluck up the courage to put in such a low offer. I really want this house and I don't want them to think we are time wasters! It would really help us as we could then put a slightly larger deposit down.

Tomorrow is the day we are going to put in offer, but I am going to get someone else to do it becuase I really am embarrased!

Addy1

I forgot to add the vendor hasn't even decided which area they are moving to let alone seen a house they like so doubt they are in any rush

Although I have deduced it has been on the market AT LEAST 3 months probably longer

Gorgeous_George

Addy1 wrote: »

I would also be annoyed if we got an offer accepted of say, 127k as I would then be hit with stamp duty and it actually is like putting in an offer for an extra 4k rather than an extra 2 if you see what I mean?

Stamp Duty is 1% from £125,001 to £250K. The start is higher than £125K in certain areas.

Therefore, on £139K you pay £1,390 and at £127K you would pay £1,270. A difference of just £120.

Of course, you should offer less than asking price. How much less depends on what you think you might get away with and how keen the vendors are to secure a sale. Offer too low and you risk losing the respect of the vendors. They might prefer another buyer who starts with a higher initial offer.

I'd go in a £125K (90%) and offer more for fixtures, fittings, car, old budgie cage, collection of spiders etc..

GG

gordonstights

Personally if I thought the house wasn't overpriced then I would not expect them to drop 14k so you can avoid stamp duty. If you really want the house then budget for stamp duty in all the costs and resign yourself to the fact that you may have to pay it even if the purchase price is only a few grand over the threshold.

I do know how you feel though - most of the houses we have been looking at are around 130-140K and it makes you sick that you might have to pay it. However, the house we are trying to buy right now is in a deprived area so stamp duty doesn't kick in until 150K, so we (thankfully!) don't have to pay it at all on a 145K house.

Hope negotiations go well for you! Good luck

Addy1

Gorgeous_George wrote: »

Stamp Duty is 1%. So on £139K you pay £1,390 and at £127K you would pay £1,270. A difference of £120.

GG

I know that, but if it is under 125k then we pay nothing, and I would rather that 1270 be put on as extra deposit rather than in the governments pocket.

Surely that is just a sensible sentiment?

Addy1

gordonstights wrote: »

If you really want the house then budget for stamp duty in all the costs and resign yourself to the fact that you may have to pay it even if the purchase price is only a few grand over the threshold.

We have budgeted for stamp duty, but it would just be nice not to have to pay it!

lotto-dreamer

In case it helps anyone, herewith link to check for government's "disadvantaged areas" where you are exempt from Stamp Duty up to £150000 - you need postcode of property you are thinking of buying to check

http://www.hmrc.gov.uk/so/dar/dar-search.htm

Gorgeous_George

I still don't see how paying £1,390 in Stamp Duty is like offering an extra £4K

Stamp Duty is an appallingly unfair tax.

If you are happy to pay £135K, offer £135K and ask the vendor to pay the SD - or offer £134K.

GG

Addy1

What I am trying (unsuccesfully) to say is that

We put an offer in of 125k - no stamp duty.

We put an offer in of 127k - we have paid 2k more for the house, plus we have to pay stamp duty of £1270

2000 + 1270 = £3270

Therefore by increasing our offer by 2k we end up paying £3270 more for the house!