Seller Paying Stamp Duty - Any (Legal?) Complications?
Discussion
Is there anything specific/complicated to stop the seller paying either all or some of the stamp-duty for the buyer in a property transaction as part of the negotiation process?
I've seen new-build developments offering to "pay your stamp duty" and in fact in a previous property purchase of my own, the stamp duty was contributed to buy the seller as part of the negotiation. I had to declare this to the mortgage lender, but if didn't cause any problems on this ocassion.
As this potential purchase is a "third home" for us, we're liable for the additional 3% rate. In our view, by negotiating with the seller to, for example, pay the asking price of the property but in return they pay £5k of the stamp duty, this means we require less funds 'up front' and can add the additional cost to the mortgage without exceeding the LTV ratio required.
For example, if the asking price is £265,000 and we pay £265,000 we are liable for £11,200 in stamp duty.
If we paid £260,000 the seller is giving a £5k discount, and we are liable for £10,800 - Saving us £5,400.
But if we paid £265,000 and asked the buyer for £5,000 towards the stamp-duty, although we'd only be saving that £5k, it would be £5k we don't need to spend immediately, and could be used instead for decorating etc.
Could anyone offer any advice/insight on this?
Thanks!
I've seen new-build developments offering to "pay your stamp duty" and in fact in a previous property purchase of my own, the stamp duty was contributed to buy the seller as part of the negotiation. I had to declare this to the mortgage lender, but if didn't cause any problems on this ocassion.
As this potential purchase is a "third home" for us, we're liable for the additional 3% rate. In our view, by negotiating with the seller to, for example, pay the asking price of the property but in return they pay £5k of the stamp duty, this means we require less funds 'up front' and can add the additional cost to the mortgage without exceeding the LTV ratio required.
For example, if the asking price is £265,000 and we pay £265,000 we are liable for £11,200 in stamp duty.
If we paid £260,000 the seller is giving a £5k discount, and we are liable for £10,800 - Saving us £5,400.
But if we paid £265,000 and asked the buyer for £5,000 towards the stamp-duty, although we'd only be saving that £5k, it would be £5k we don't need to spend immediately, and could be used instead for decorating etc.
Could anyone offer any advice/insight on this?
Thanks!
So effectively you're looking to raise an extra £5k on your mortgage to provide decorating funds? The money from the seller would be a gift, and not actually related to stamp duty. But if you can persaude them to do it, why not? Only problem would be if they change their minds about the gift after you send them the £265k.
otherman said:
So effectively you're looking to raise an extra £5k on your mortgage to provide decorating funds? The money from the seller would be a gift, and not actually related to stamp duty. But if you can persaude them to do it, why not? Only problem would be if they change their minds about the gift after you send them the £265k.
First part, yes, looking to raise additional funds on mortgage for further works. Second part no, the stamp duty becomes (from memory) part of the contract and the solicitors get agreement from both parties before exchange. I'm sure it was written down formally earlier this year when I bought the last place, but at that time it was a very small contribution.
romeogolf said:
First part, yes, looking to raise additional funds on mortgage for further works.
Second part no, the stamp duty becomes (from memory) part of the contract and the solicitors get agreement from both parties before exchange. I'm sure it was written down formally earlier this year when I bought the last place, but at that time it was a very small contribution.
Ask your lender/broker how they need to report "Vendor incentives"......Second part no, the stamp duty becomes (from memory) part of the contract and the solicitors get agreement from both parties before exchange. I'm sure it was written down formally earlier this year when I bought the last place, but at that time it was a very small contribution.
When we bought our house the vendors paid the stamp duty. I had a 10% deposit but not the £15k stamp duty so rather than offer less and reduce our deposit to 7% and take the hit on mortgage rates we negotiated the stamp duty deal. The mortgage company were made aware and didn't mind, they allowed purchase incentives up to 5% of the value of the property I believe (Woolwich). I don't see how your proposal is any different really.
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