Asking seller to pay stamp duty on a flat

Cyprio

Cyprio

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Basically my wife and I are looking to buy in the current, rapidly overheating market in London. 10-20 people turning up to viewings for every flat we have seen and flats in our budget (250-300k) going for 10-15k over asking. <Roll eyes> (cant find new smiley button!)

We have recently seen a flat on the market for £255k; basically looking to get an offer of £250k. I don't think anyone would offer significantly more as although a decent size, it needs a fair bit of work and isn't in that great an area. However, we think they are likely to get a few offers at £250k and we are wondering how we could make our offer more attractive. We are 1st time buyers, currently renting, with a mortgage agreement in principle - and we know the vendor wants to sell quickly as was previously tenanted but currently sitting empty. We thought about the offering a bit extra cash on the side for 'chattel' but there us literally nothing in the flat worth anything more than a few £100 and this is pretty much tax avoidance in my eyes anyhow.

Then i read up on people offering over the asking price but asking the vendor to pay a % of the increased stamp duty e.g. £260k as a way of them getting £255k in the end.

Anyone have any idea if this is above board? And if so, do you think it would make our offer more attractive or less so?

Thanks
 
I wouldn't of thought it above board. Stamp duty is your responsibility and while there may be a handshake agreement the vendor pays some, you'd never manage to hold them to it if they didn't want to. Why not just emphise your strong points instead?
 
Good point - i was wondering if you could ask the solicitor to write it into the sale agreements?
 
I dunno. I guess they'd just withhold the agreed sum from the sale funds. So if you agreed £260k with the vendor donating £5k to stamp duty they just transfer £255k. But I would of thought that would effect LTV calculations on your mortgage so.....
 
Ah. True - just read up on this more and it would be a vendor incentive and the lender would take it into account.
 
Cyprio said:
Good point - i was wondering if you could ask the solicitor to write it into the sale agreements?
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All the solicitor needs to do, is to ask the other side to confirm this agreement, and then get them to transfer monies into your client a/c, with the description - monies on a/c for stamp duty.
 
You would also need to declare this to the mortgage company as it is muddying the water on the price paid.

If you have all the finance in place then I'd look at auction properties instead. It's normally 10% deposit so that excludes any buyers that don't have a decent chunk to put down. If you can find somewhere that needs work that you can do while renting and living elsewhere you're quids in. This way you won't have haggling and can set a ceiling price of below that stamp duty threshold so you aren't wasting money on a tax that is easily avoided.
 
You would also need your Solicitor's agreement on this as it stamp duty avoidance! He needs to report the transaction to HMRC so he would have to be comfortable with it.
 
Thanks for the advice - wont be going down this route. Decided its not worth the hassle and as you all say not 100% it's above board.

Going to focus on making us look like reliable buyers who can move quickly. :)
 
May years ago, I paid £2000 for a shed and an oven to avoid stamp duty. The solicitor had it written into the contract.


Steve.
 
I'd have thought that you being first time buyers with no 'chain' behind you would be incentive enough for them?
 
Anybody marketing a property at £255K knows that it won't sell for that. Also there's a rumour (isn't there always - these guys live on FUD) that HMRC will look very closely at any transactions near SDLT limits to make sure you aren't overpaying for chattels in order to avoid tax.

I'm not sure there's anything actually illegal in getting them to pay the stamp duty but it has a bunch of practical issues. I don't see it's tax avoidance as you're actually paying more tax rather than less (between you). But if you offer £255K and they pay half the stamp duty they have no more money than if you pay £250K (I think I have that right - it's Monday...)

It comes down to basic negotiation - what do the vendors want? Do they want to move fast, move slow, be out by Christmas, is money more important to them? What? Then prepare a case for the estate agent that shows you are the perfect buyer.

Or just offer £255K and accept that this will really cost you 10K more than £250K.
 
I know when my Dad bought his house 30 odd years ago he paid £20K for it and £500 for the front gates......... Obviously you need to be careful as it could be seen as tax avoidance but I guess such practices have been going on for years.
 
Why has the housing market suddenly gone ape? I cant help thinking its a bad thing in the long term again. What with the financial sectors inabililty to learn from past mistakes what have you.
 
DorsetDude said:
Why has the housing market suddenly gone ape? I cant help thinking its a bad thing in the long term again. What with the financial sectors inabililty to learn from past mistakes what have you.
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Supply and demand, lack of available property coupled to a loosening of the purse strings by the banks
 
Steep said:
I'd have thought that you being first time buyers with no 'chain' behind you would be incentive enough for them?
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You'd be surprised.....

Depends a lot on the area but it looks like the property market is warming up again. Boom comes after bust, right? I just wish I could remember what comes next :D
 
DorsetDude said:
Why has the housing market suddenly gone ape? I cant help thinking its a bad thing in the long term again. What with the financial sectors inabililty to learn from past mistakes what have you.
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Because the banks run our economy not politicians, and they are still trying to balance the books from 2008. So pushing the mortgage market to go higher is the only option in this area...larger lending and larger debts means the banks can carry on making profit off the climbing cash flow and leave us to cover the inevitable consequence called inflation.

I'd guess less than 10% of the price of our homes is real asset, earned by real labour and real production ...90% of our homes are virtual asset, made from non-products that have no trail of production, materials, labour, wages etcetera.

Bloody annoying isn't it. :D
 
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Cyprio said:
One would hope so...

Offered 250 in the end and awaiting a reply!
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Fingers crossed ;)

Hold tight though - hearing rumours of a possible change to SDLT that may be in the Autumn statement this morning.
 
No such luck!

Anyway, just had an offer accepted on another flat at 280,000 so fingers crossed this goes to completion....
 
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