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.

And if the buyer came back to you with "How odd, we were about to contact you to ask if you wouldn't mind paying an extra £10k because the Stamp is going up tomorrow so I can pass that on to the lovely but poorer couple buying our house?" No, I didn't think you would like that .

It all depends on the market, if the market is booming they'd be nuts to entertain a drop. If it is flat or down, they may entertain it to get rid. I've bought and sold through both types of markets and been gazumped and been gazundered. You and your seller have their opinions. But these tax rises are designed to reduce upwards inflation on house prices and make them cheaper so you aren't being unreasonable.

Couldn't you take equity release in the house that your parents are in? It sounds like you have paid a lot/most of the contributions towards the property anyway.

Yes, it's worth asking. There can be a lot of things that go into negotiations. Maybe they'll go halves with you.

Basically you own two homes and you’re asking your seller to bear the cost of the extra stamp duty. I don’t think you’ll find many sellers willing to do that unless they’re desperate to sell and have wiggle room. Problem is, if they’re tight on what they can afford for their next home it’s a knock on effect. Alternatively, if your parents have now paid off their mortgage get your name taken off the deeds. Depends on the financial implications.

Horrible idea. Equity release is stupidity personified.

thats quite a generalisation.

Of course not!

Same thing has just happened to me but on the other side, buyer has asked us to decrease £8k. I can’t afford to do it for one, but I also don’t think it’s fair to pass on your issue to someone else

Not ideal but you could consider equity release from the first property. Money Saving Expert have names of reputable firms.

So if the stamp duty had gone down and you’d saved money would you be offering to pay the seller more????

Are you sure it will apply as you were already. The process of purchasing
so unfortunate

You could have been on your parents’ mortgage without being on the deeds.

It’s right people buying second homes should have to pay more tax, particularly when often the reason for it being a second home is so they can dodge paying inheritance tax on their parents’ property.

Genuine question: why is it stupid? I get that downsizing is a better option but if that is not possible and your home is your only asset, why not? Especially if the money is at risk in being swallowed up in nursing home fees etc.

They'll defo be pissed. You're saying you can't afford stamp duty because you want two homes so because you cant/won't take the hit you want them to be financially worse off so you don't have to be.

Morally I think its unreasonable to move the goal posts this late, if you can't afford 2 homes don't have 2. The bank however might help if you went interest only on your parents property. It is also worth remembering their could be additional tax implications if you move to the 2nd property and recieve money from your parents towards the mortgage on the 1st one.

Saying that it doesn't mean they'll say no. And theyre strangers so does it matter if it pisses them off. It depends on a lot of factors, if there's a chain, if they're desperate or kind. It's unfortunate this change has impacted you, but ultimately your problem and no one else is obliged to help.

Compound interest. My SiL did this when her husband died twenty odd years ago. The interest racks up frighteningly quickly. She’s now run out of equity and will soon have to pay rent to live in her own home. I’d rather it be swallowed up in care fees and afford myself and DH a comfortable old age than see it go to ruthless equity companies who are knocking on your door the minute your equity runs out.

Mmmm ... It does not pass the "pub test". It sounds to me like you are buying above your means and you want someone else to support you in this by giving up what they already negotiated with you and your realtor.

You are being unreasonable.

Loooooool

Nope. You need to find a house within your means. You can’t ask the vendor to give HIS stuff for less coz you can’t afford it otherway.

law changes happen. It is not nice…but in no way the responsibility of your vendor.

You will be asked if you have the extra needed so be prepared to be refused if not!

Good luck 🌺

I have agreed to this, but the whole chain agreed to share the loss, so 3 purchasers were involved and we were only losing £1700:each. At this late stage it was better than starting again.

That’s mean of the gov to not phase these things in with more warning…

I think your options are:

1. Ask the sellers very nicely if they’d be willing to help (although presumably they will be stung for more stamp duty when they buy too)
2. Borrow against your parents house
3. See if your new home lender will lend $10k more
4. Ask your parents for the $10k

Equity release is not financially a good idea at all.

The increase is only on a second property, so unless the vendors also own another house in addition to the one they are selling / one they are buying, they will not have to pay extra stamp duty. Op wants the vendors to sub her desire to own more than one house..

Agree. It can easily get out of control, and suggests poor financial planning.

I was listening to a YouTube channel called moving home with Charlie about this very thing and he suggests to meet the seller half way and suggests a reduction of half the additional stamp duty.

Its crazy that they introduced this immediately rather than later.

Do a transfer of equity but keep a charge on the house and get your parents to sign a legal charge saying you will be repaid x amount on sale. The seller won’t drop the price just because of the stamp duty changes and it would be unreasonable to ask them to. If it was me selling it to you and you asked that because of the increase in stamp duty I’d pull out and sell it to someone who can pay what you were going to originally