Gifted equity deposit - SDLT 1 form

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  • SDLT_Geek
    SDLT_Geek Posts: 2,464
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    I think they need to clarify their policy on ‘gifted equity’. I’m hoping this is resolved soon. It seems fairly straight forward to me and to our solicitor. The lender however, not so straight forward....

    Yes, lenders do sometimes use the term "gifted equity" loosely. Let us hope that they mean it in the true sense (which could also be called a "concessionary purchase" or "transfer at undervalue") and that they do not have in mind a "gifted deposit" structure.

    What you are looking for is a structure where they accept that the contract and transfer will state the lower sum that is actually being paid and not documenting a cash gift of the difference between the value and the price.

    Hopefully the lender will be happy to lend against the value of the property rather than focusing on the price and will not be put off by it being a transaction at undervalue.
  • SDLT_Geek wrote: »
    Yes, lenders do sometimes use the term "gifted equity" loosely. Let us hope that they mean it in the true sense (which could also be called a "concessionary purchase" or "transfer at undervalue") and that they do not have in mind a "gifted deposit" structure.

    What you are looking for is a structure where they accept that the contract and transfer will state the lower sum that is actually being paid and not documenting a cash gift of the difference between the value and the price.

    Hopefully the lender will be happy to lend against the value of the property rather than focusing on the price and will not be put off by it being a transaction at undervalue.

    If it is indeed the case that they’re using the term in the wrong sense, is there any way around it other than finding another lender?
  • davidmcn
    davidmcn Posts: 23,596
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    I suspect you (or your broker or solicitor) just need to find someone sensible to talk to at the lender.
  • The lender are completely adamant they want the value to be the registered amount and the solicitor is adamant that only the purchase price can be registered. Is there a way around this such as an assumption of debt included in the net consideration which is then cleared immediately after completion? It’s the only thing holding things up now I believe and I am so frustrated :mad:
  • Pixie5740
    Pixie5740 Posts: 14,515
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    Find a different lender that accepts "gifted equity" and understands how it works.
  • We really don’t want to have to go through this process again, it’s been ongoing since August. It’s so frustrating because the mortgage offer is there, it’s just hit a brick wall over 15k gifted equity with it being under the SDLT anyway :mad:
  • The lender quite clearly state on their website they accept gifted equity at no extra charge.
  • SDLT_Geek
    SDLT_Geek Posts: 2,464
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    I note from a posting you made on another thread that in your case it makes no difference to the SDLT payable whether the relevant price is the value of the property £118k or the net figure £103k. Also you say there that the deed of gift form which your grandparents have signed is ambiguous as to whether they are gifting you a sum of money or confirming the element of gift by selling at undervalue.

    You say the main problem is the figure the solicitor is to put on SDLT1.

    That is likely to be solved by looking at the TR1 (the transfer) and using the figure stated there for the price on the SDLT1.
  • SDLT_Geek
    SDLT_Geek Posts: 2,464
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    OP, have you had this resolved now? Is this a case where the lender wanted the higher figure (£118K) put on the contract and transfer? If so has your solicitor now agreed that it is correct to put the same figure on the SDLT1 for stamp duty land tax purposes?
  • SDLT_Geek
    SDLT_Geek Posts: 2,464
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    OP. Did you get the mortgage sorted out in the end?
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