Sellers should avoid Cashbacks and Gifted Deposits

dander

I've always wondered with these kind of deals what does it get registered as with the land registry. Does the aformentioned property show as being sold at £220k or £198k?

Jorgan_2

The contract price gets registered, £220k against the true purchase price of £198k. Developers loved it as they could direct surveyors to the land registry figures and show five comparable sales.

FraudBuster

The contract price gets registered

,

So the statistics produced by the LR are based on false information?

Richard_Webster

I don't know whether the Land Registry edit the figures to exclude those that are obviously misleading but generally they will only be told what the price is and the background circumstances will not necessarily come out. Fundamentally they are a registration organisation who collect fees based upon the price expressed in documents produced to them and as far as I know that is what they base their statistics on. The statistics are a by product only.

For instance, house worth £300K jointly owned by a couple A & B with a £150K mortgage. They split up and A buys out B and pays half of the difference between mortgage and purchase price so the Transfer Deed would show a price of £75K. I think that figure would go down as the price and unless you knew the area and realised it was obviously unrepresentative you could think that was really what the house was worth.

Jorgan_2

FraudBuster wrote: »

,

So the statistics produced by the LR are based on false information?

Having reviewed the LR figures for new builds in my area, I would say yes. I have also seen properties that have been sold with a vendor gifted deposit be listed on the contract price, rather than the sale price. Panorama had a programme covering this about two months ago, it may be on Youtube.

wrightstar

going back to the origional post.

I am buying a new build house right now and am due to exchange asap, just need to sign the mortgage offer and give it my solicitor.
We first agreed to pay £190k with an offer of 5% deposit paid, then the survey came back at £180 as they had included the 5% deposit incentive. We then offered the builders £180k with 5% deposit also. They accepted our lower offer.

Our mortgage is a 90% mortgage for £162k, we are paying £9k and the builders are paying the other 5% themselves.
Our mortgage offer was sent out by 1st class on tuesday and we are still waiting for it to arrive for signing.
My solicitor received his faxed copy the same day.
At the time it was printed the property price was £180 with no other deposits or incentives included.
I called the lenders and advised the builders are apying 5% deopsit. Our lenders are happy for this to go ahead apparantly as long as they get their 10% deposit paid.
Once i sign the mortgage offer can the lenders then say the new purchase price is actually £171K and that they want us to pay a further 10% ourselves?????
Are these incentives not allowed?

SquatNow

Gifted despoits etc are irrelevant. The bank will lend you money based upon what their valuer thinks the property is worth, not what some sociopath estate agent says it's worth.

They'll work out what it's worth, multiply that by their LTV ratio, and that's what they'll lend you.

Ian_Griffiths_Halifax

I must say that I have sent First Time Buyers away who don't have a 5% deposit, and told them to ask the vendor to pay the 5% deposit.

That doesn't mean increasing the price to then reduce it again to the original price after the 5% deposit is paid. No, it would be a genuine 5% off the asking price.

There are lenders who accept it and some who don't. It is down to the valuer for the lender, at the end of the day, to accept that the value is ok.

In all cases the lender needs to be advised at the start, of any agreement between the vendor and buyer. It saves any cofusion and problems later on.

tryinhardtosavethepennies

If you were trying to sell your house and had a little bit of negative equity, could you arrange for a new build developer to pay your deposit on the next house so you could use your deposit to reduce your price to encourage a sale and pay off the negative equity?

challa_2

I'm new to this so I'm probably in the wrong place! Cam anyone tell me the lenders that accept the vendor paying 5% deposit as we have been refused a mortgage by the Halifax and there seems to be nobody out there that can help us get on the property ladder! A year ago we were getting stupid mortgage offers that we could never have afforded now, know lenders will not look at us and we are earning a lot more with a lot less to pay out! Any ideas? Thanks!x