To ask seller to reduce asking price due to stamp duty increase

[Ouch12]

Hello,
I am on the deeds for my parents house. They couldn't qualify for a mortgage as they were too old, so I was added to the mortgage.

I am now buying a house for myself - purchase has been ongoing for 2 months.

However, my can't buy me out from their current home - they just don't have the money.

In the Budget stamp duty on 2nd homes increased for 3% to 5%. This means I will need to find an additional £10k for stamp duty, which I don't have.
I will try to increase the mortgage amount to cover the extra £10kz

If the bank don't, I don't know how I will be able to afford the additional £10k. My parents are already gifting me money, so I cannot ask them any more.

Worst case, I might ask the seller to reduce the price by £3k -£5k but I'd imagine they'd be pissed.

Would you be willing to reduce the price if you were selling.

No. Why would anyone..can you come off the deeds.

It's not really the sellers problem if a buyers tax has gone up, it's your tax increase not theirs

It is very much the seller's problem if their buyer cannot afford the increase and needs to pull out. The market isn't exactly great in most places at the moment so there's no guarantee they would get a better offer.

I didn't think the increase in stamp duty would apply if you are replacing your main residence?

Do you own a percentage of your parents house?

My mum owns a percentage of my nans house. She didn't need to pay the 'second home' stamp duty because she was replacing her main residence.

You are already incredibly lucky to be in the situation you are in. To now expect the seller to knock money off the price you already agreed in order to compensate you for the handy ‘second home’ arrangement you decided to enter into when it financially suited your family is beyond cheeky. You can’t bend the rules when it suits you and then bend them back. Why should they knock money off their sale price to effectively fund your parents’ overstretched mortgage?!

No I wouldn't reduce the asking price if i was the seller. Not a chance!

It's your responsibility to take advice on the affect you being on your parents mortgage will have on your future plans to purchase. As you are now classed as having an interest in a property you must be pay the higher SDLT. It's just the way it is....otherwise everyone would go on their parents mortgages for Inheritance Tax planning...

‘Wholly as your mess’ 🤣

Wow I can’t believe how rude these replies are! If you’re that close to exchange I suspect most people would agree a £5k reduction - they’d lose more financially be trying to find a new buyer and the chain collapsing

I wondered if the deed could be set aside and a lien put on the house backdated so that you will receive the money back plus profits accrued as a percentage of the original loan.

Not sure how you can raise the extra £10k but you can (currently) claim higher rate SDLT back if you sell your old home within three years. Any chance of that happening?

https://www.gov.uk/guidance/apply-for-a-refund-of-the-higher-rates-of-stamp-duty-land-tax

This budget is shite for a load of people that currently have an edge case, like you.

I asked before op. Did you live at the house whilst owning part of it? If no, this was never your principle primary residence. But if you bought into the house after the additional stamp duty hike and didn’t declare it then you’re stuffed.

If the property was never your PPR during the time you have part owned, you are not buying a second home. In this case, I would be getting your solicitor to get specific advice on this as you should only pay regular stamp duty on your main residence.

I was also going to suggest selling your share of the house back to your parents for an interest free loan to be settled against the value of the house once sold. The only thing there is you won’t benefit from the any increase in value of the property, which may in the long run not be financially beneficial. I would not, as suggested upthread, get equity release as it will end up costing a whole lot more than the additional 5% on your purchase.

OP, I am in exactly the same situation as you. I have an accepted offer and due to exchange contracts next week, so missed the deadline today.

First UK property but I have overseas property. Whilst I had budgeted 3% additional stamp duty. 5% was a complete shocker.

I will take two actions tomorrow.

1. Speak to my solicitor- HMRC have exercised discretion in the past and I want to see if in this case i can say that the purchase has been "substantially completed" and avoid the additional 2%. I have already incurred costs in application/conveyance/legal fees etc. so its not just a case of pulling out. (I am sure there are many others in same position and HMRC should have a position on this).

2. Assuming (1) fails. I agree that seller would not care about my position, they will however care about $, so have to appeal to their sense of logic.

Get the mortgage approved ASAP and then basically go to the seller and say listen I am ready to exchange and settle fast. Please reduce the price by 1% because this is an unforeseen cost and I am struggling. There is time value of money in receiving the settlement sum faster (heck just getting lump sum in a term deposit will earn good $). If I cannot settle then the time in them trying to find another buyer (X'mas is coming) will cost them more than 1% in long run. Hence reduce price by 1% and we will split the difference. Seller won't be happy with this, and nor am I but again this is something that neither could anticipate.

Yes, I lived in it with my parents.

Not rtft but I'd say ask, it's better they lose that than you as a buyer as they would probably really suffer a lot more from you pulling out. They can only say no.

Ok well, for you to decide whether or not you want to sell your share of the property to your parents for an interest free amount eg 100k to be payable when the house is sold or inherited. You won’t benefit from a rise in the house price.

If you don’t decide to do this, I would still get the house valued and work out the value of your share as you will have to pay capital gains on the profit for the time, when you didn’t live in the property should the house need to be sold.

You don't need an interim valuation for CGT, as the calculation is made when it is sold. CGT on a part share when a property has been a primary residence for part of the time is calculated on a time apportionment basis, and takes no account of the rise and fall of property prices during the period of occupation.

Is there any way you could make the difference a payment for white goods or furniture? Payments for fixtures & fittings don't count for stamp duty.

How is it anything other than the OP’s mess? She’s on her parents deeds to dodge paying care home fees. She’s pleading poverty that she can’t pay £10k in tax so she can keep her £100k equity in her parents home. If you are so believing that it’s not her mess you can pay the £5K she wants her sellers to pay then she can keep all her £100k equity and get her second home.

Again, in my post I said there was probably wiggle room if genuinely close to completion but not half the tax bill. She is going to have to go more on a 70/30 or 80/20 split and expect all good will to be gone.

Some of the replies here are addressing the wrong question- whether the seller ought to agree to this. Hence all the confected outrage.

You can ask. Whether the seller agrees will depend on how much value they place on the sale going ahead- if they’re desperate to move they may well agree. If they’re in two minds about moving anyway they’ll probably say no. I know if I were the seller I’d far rather you asked the question than just pulled out.

The fact is the change to stamp duty for second properties is going to affect current and future sales as people might be deterred from buying or might be prepared to pay less. So people can say my house is ‘worth what it’s worth’ but be prepared for the worth ‘I.e the price buyers are willing and able to pay’ to possibly drop.
The ‘good will’ posters make me laugh, it’s a financial transaction not an ongoing relationship. VYF’s advice is good. If you ask for a reduction you don’t need to give all the details. They can say yes or no then you can decide.

Second homes, are just homes which aren't your main residency. It's not because you bought it second. Local Council are who decide if it;s your main residence, or a second home.

I could lend her parents tomorrow say £50k. A lien would be put on the property. I would not be classed as being a second home owner. The OP is either confused or has been badly advised.

earlier comments suggest OP loved at the property at one point (if not now)

Probably not. If they are buying somewhere else they will be in the same position as you having to pay an increased stamp duty. So reducing the price would be a double whammy. I can see a lot of house chains falling through over the next few weeks.

The change only applies to people buying additional properties/second homes, so there is no reason to assume that the vendors will also be affected.

However, the fact that the OP is only in this position because she already owns another property (which she wants to retain for the IHT benefit) is likely to make them less well-disposed to any request that they should share the burden.

I had a similar issue to you when I was buying last year. I own half of my deceased mum’s house. My step father lives in the house and owns the other half.
I was renting and wanted to buy.

I was told by a financial advisor that I would have to pay the extra duty because I already owned a home.

i checked with the solicitors who were dealing with my mum’s estate. They said not because the home I part owned was not my primary residence and I had no current financial gain from it.
would that be similar for you @Ouch12 ?