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.

On a separate but related matter, you won't be the only person who owns a home which a family member lives in because they can't afford to buy for themselves, and all these people will suffer badly from the increase in stamp duty for second homes when they need to move themselves.
If your parents realised how difficult this is for you, perhaps they would be keen to remove the problem by agreeing for their home to be sold then downsizing into a new place which could be bought with the equity.

Could you borrow it secured against your parents home in which you have an interest?

Id not be keen to reduce the price to be honest. How much are you paying for it? I might do it if pushed and you would pull out otherwise and I didn’t fancy marketing it again.

Can a declaration of trust on your parents’ property stating that you are holding the property as trustee only with no beneficial interest avoid the SDLT surcharge on your own property.

Secondly, if you’ve never occupied your parents home as your main residence then you may not be liable for the higher rate SDLT

You need advice from a qualified SDLT solicitor, but you can’t expect the seller to drop their price

That debt would then go against what she can borrow on her new mortgage. Best to see if she can just borrow more on the new mortgage to cover the difference depending on lending limits and LTV limits.

I don’t agree with the majority here. You haven’t exchanged and it is a completely unexpected cost.

There is nothing wrong with asking them to share the tax. Of course, they have every right to refuse and put the house back on the market.

But it is money. You need to do what is right for you.

If they have been slow to get documents and get a date then I think there is a justification, if it hasn't been long or you/your solicitor has held things back then I think it would be very rude.

Feel free to ask. As the seller l most likely would decline. That’s £10k less for my onward purchase and it wouldn’t be my fault you own 2 properties. It would regard as your problem to find £10k

It's all about the why. Why the seller selling? Is it a distressed sale? i. e. They need to shift it now? Then they may negotiate.

Or, is it a separating couple where they need to maximise sale price to buy a smaller house each? Not so likely.

Or are they in a chain waiting to move into a new build and need to sell their place in order to complete on the new property? They may negotiate.

If they need to sell, go round with a clipboard and open every single door and window, tell them that their wallpaper is crap, kitchen needs modernisation, a door squeaked, and that the garden will need thousands spent to make it child safe. Then make your offer.

But it will only land if they are actually a motivated seller and can absorb the hit.

Steer well clear of the woe is me, second house stuff - they are more likely to put the price up!

This is entirely your own financial increase to absorb. Not your parents. You should never have agreed to be part of their mortgage as a 2nd loan and implications was always a risk. If they couldnt afford it then they shouldn’t have bought their home. You should’ve always thought there may be some problem associated with this. Completely unacceptable to ask another family needing the sale money from their home which is obviously worth its cost, to then accept a lesser sum. If you asked me, I’d refuse to sell to you at all. I would never trust you.

Do they need to downsize for affordability and release you from this strange situation?

You can ask. I would expect the seller to say no.

There is no harm in asking. It depends how desperate they are to move.

If you can't continue without their help then you will have to pull out.

If you don't ask, you don't get.

Discuss the situation to the estate agent and explain that the sale might fall through unless they're flexible.

They might have bought the house 25+ years ago and could be sitting on £350k+ of equity.

You should ask your parents to cover the increase imo

Exactly this.

They might also have found their dream house which they don't want to lose.

You're asking a stranger to lose £10k so you can continue to facilitate your parents living in a house they can't afford?

Ffs talk about overreacting with the I would never trust you and refusing a sale. She’s had a change in circumstances and is being upfront with the seller. They can indeed say no. And you’re assuming it’s a family who need the cash - it might not be. It could a be a single pensioner selling their mortgage free home. My mum bought her house in 1995 for 60k. It’s now worth 550k. She has no mortgage. I don’t think she’d give a shit about 10k if she was selling tbh and nor should she.

Tricky, OP.

Did the vendors know that you were a part-home owner or did they see you as a ftb?

I would be very annoyed if I was a vendor and had not been told that the buyer would in effect be a second-home buyer because this was such an obvious flashing beacon of a target in this budget.

However… do check with your solicitor how you are placed buying this as your main residence.

If there is any chance of coming off your DP’s deeds (because the mortgage is paid off) I think you can get a refund of the 2nd home amount within 9 months, if you can cash flow the extra £10k in the meantime?

Realistically, if youre paying what the house is worth, then they'll not give you, a stranger, £10k because of taxation. You can ask.

Have you had proper advice on capital gains tax, inheritance tax, deprivation of assets, etc? You need to be aware of needing to pay capital gains when you sell up.

Theres always a lot of emotion with house buying, go on property board and the stories of people being let down are heartbreaking and the system needs a major overhaul, but, at the end of the day its a business transaction.

Morally no, but at the end of the day if you can't afford the increase then thats the end of that. I would follow previous posters advice about ensuring there is no way around this. If not and your parents cant give you the money then you have to be honest. "The new tax means I cannot raise the full amount. Either we agree on a lower price or ill be forced to pull out."

Its awful and youre putting someone in a bad position but if it has to be done then its totally in their hands if they want to collapse the chain and remarket or reduce.

So you are doing a tax dodge to bypass inheritence tax, and you think that this means a buy should reduce the amount they sell their house for, to reduce your tax liability.

I think I'd tell you to piss off on principle. Even if it didn't make any financial difference to me.

This is your problem to resolve. Not theirs. There are other buyers out there.

In this situation I'd be very surprised if the bank (or another mortgage provider) doesn't agree to £10k more on the mortgage, unless you were right up against the top end of what they would possibly lend either to you or on the property LtV.

Haha, classic Mumsnet:
"It's your mess to sort out as you want to own two houses!" Well no it isn't, actually- it's the vendor's mess too seeing as they are so close to exchange. Unless they want to start from scratch again. Nobody is going to cut their own nose off to spite somebody because they own two houses, so it's definitely worth asking. The worst that can happen is they say no.

One day's notice for this new significant cost is ridiculous. Are you sure it's definitely effective from tomorrow?

I would tell you to jog on but can't hurt to ask

I think it’s a good thing, even if they delayed it by three months a lot of potential money would be lost. Money that can be spent on the NHS and other public services.
Exceptions like this are rare, and if it reduces the number of landlords buying up properties then that means more houses available for people try to get on the property ladder.
Went to look round a local new build housing estate recently, every single two bed house had been bought up by a single buyer.