Seller pays stamp duty - has anyone actually done this?

[threeleftfeet]

Our flat is priced at just over stamp duty. A lovely mumsnetter suggested we consider paying stamp duty for the seller.

This makes total sense for us as we have a buyer interested, who can't go over £250 because of stamp duty, but is interested in this offer.

However, I have been warned that some lenders don't like this.

Can I ask - has anyone actually done this successfully?
I'd also be interested to know if you've tried doing this but it didn't work.

I'm definitely up for it in principle, but I'm wary of going down this road only to be told it won't work after we've all invested time and money in this sale.

TIA :)

It's also worth considering whether it's worth it for you. For example, if you want £255 for your flat you be better taking £250k than insisting on £255k with you paying the stamp duty (of £7,650, meaning that you only really got £247,350 for it). Even if you're hoping to get £259k is it really worth all the hassle/putting buyers off for just over £1k?

DamselInDisgrace it is definitely worth it for us. We would not consider paying stamp duty on an offer for £255K! That obviously makes no sense. It's on the market for just under £280K. I would rather rent it out for a year, until the market takes it away from the stamp duty threshold than drop it to accept £250K.

It actually doesn't matter to us if the market moves down or up! The flat is in London. We need enough money to buy a place in a different town outside of London. If the market drops in London, it'll probably drop more in the town we're looking at. And if the market goes up in London, it'll go up less in the other town.

Either way, if the market moves we won't be stuck in this no man's land of just over stamp duty!

If we want to sell it now, we need to do something to shift it I think, and this is the perfect solution for us. We're not in a hurry though, and dropping to £250K is out of the question for us.

Also, what we've offered actually, is to pay the full stamp duty for the asking price, but to pay a contribution if they make an offer under asking price. We haven't got into the finer detail but I'm guessing that means something like we'd pay the extra over what they would have paid at £250K.

I only asked because we tried to buy a property at easter that was on at £265k (so everyone looking would assume that they wanted £250k). They were adamant that there was 'no room for negotiation below the stamp duty threshold', but eventually offered to split the stamp duty if we'd give them £259k (so they'd actually get just over £255k).

We declined because while we might have been willing to go up to £250k (but doubted the bank would value it at more than £245k at their most wildly optimistic), we just couldn't understand why they were so eager to piss off buyers with no chain over less than 2% of their original asking price. It's just not worth it, particularly in a market as poor as this one (we're in the north east, where prices are most definitely not rising).

We were also highly suspicious that when it came to it, they screw us over and we'd have to pay the whole stamp duty ourselves (since it would be our liability in law). That could happen very easily, and I'd imagine many other people would be similarly suspicious. I'd certainly expect any decent solicitor to be warning a potential buyer about the risk.

However, while we did look at some houses on at £280k/£285k we were less certain that they would (and should) be looking to get £250k.

For the record, the house we offered on still hasn't sold. We sincerely doubt that they're going to sell at all.

Thanks for the Damsel, that's really interesting.

We're definitely not planning to screw anyone over! But I am worried about the perception of it as being dodgy, and for that reason we've not added "vendor pays stamp" to the actual ad (yet) as I'm not sure if some buyers might see it as dodgy. We've offered it to one buyer, who put in £250K offer and said they couldn't go higher because of stamp duty. The EA is full of platitudes about how it's the most normal thing in the world, but actually I haven't been able to find anyone for whom it's actually worked yet. Luckily we are doing the viewings ourselves so I'm going to be very honest with the buyer, and say that if they are interested in the offer they must check it out with their solicitor, particularly before they spend any money on surveys etc.

If this isn't a viable option, it may be that we have to accept that just can't sell our flat until the market moves - unless we want to sell it at below its value.

Sorry, that should say thanks for the reply!

Why can't you accept the 250? If you keep it a year it won't increase in teh current economy

hi noddy, thanks for the reply.

It's currently worth more than £250K, but not as much as £280K. The stamp duty goes up from 1% to 3% at £250K and this means it's really hard to shift properties around this price.

If we weren't in the stamp duty no-man's land we'd have room to negotiate. If we were willing to accept £250K it'd be snapped up in a second! But that's because it would be under valued.

Where we live (a newly-fashionable part of London) prices are rising, and healthily so.

But even so, what matters to me is not the actual value of the flat, but the relative value between our flat and a house in the area we want to move to. As London consistently out-performs other areas, I think it's safe to think that it will continue to do so.

All that would need to happen to make our flat more saleable would be for prices to move (up or down) so that we're not in the stamp-duty no man's land, enabling people to make a sensible offer without stamp duty being an issue.

If current tends continue, the flat will put on value in the current year. But on the other hand if the economy tanks, the house prices int he area we want to move to will drop, more than in the capital I expect.

On a practical level, if we accept £250K we'll be able to afford a 2 bed with a patio area in our new town, and we'll have to move again in a few years.

However if we get what I think it's worth, we'll be able to afford a 3 bed with a little garden. That's what I'm holding out for!

Property has no intrinsic valueIt is worth what someone will pay and what the bank will lend. If it was worth what you say you would sell it! The economy is flat lining and I renovate for a living and people are selling at lower prices. The trend is downwards tbh. Next year 250k may look attractive! Anything under 300k will get 250k offers. You could offer to pay 2% of the SD.

How long has it been on?

The problem with this afaik is that if they are tight on their loan to value for the mortgage (likely as most mortgages at a good rate are demanding loopy deposits) then the mortgage co will deduct your stamp duty contribution from the purchase price for valuation purposes and the amount they will lend will go down proportionally.

For example, your buyer is paying 280k on an 80% ltv deal - they need a deposit of 56k and will borrow 224k. They are also responsible for stamp duty of (i think) 8,400.

Let's say you contribute 5k towards stamp duty. Whilst they still need to pay you 280,000 the mortgage co will impose a "price" of 275k on them for their purposes and on a 80% deal only lend them 220k. So they will need to find 60k deposit plus 3,400 for stamp duty (you having contributed 5k).

On these figures they only actually save 1,000 in cash (if I've worked it out right in my head!), although they do have a lower mortgage but if the problem is finding the cash it may not be enough of an incentive.

That is right morethan which is why most people don't do it. Plus if the surveyor down values even by the tiniest amount all the figures go awry!

Do you think it is genuinely that they 'can't' go higher (i.e. they don't have an extra £5K in savings to cover the extra stamp) or do you think that they are not prepared to go higher and are using the stamp duty threshold (quite legitimately) as part of their valuation negotiations?

I would be concerned (as a buyer and a seller) that the mortgage valuation wouldn't come up to value (if someone can't afford 5K stamp, they aren't likely to have a big deposit, so would have a high LTV putting them on dodgy ground already). Mortgage valuers will make their valuation based on comparables (i.e. what sold for £250K nearby) so they take stamp duty thresholds into account too.

noddy I think you may have missed my point? I'd be quite happy to take a lower offer next year, as prices in the town we're buying in will have gone down too, but likely by more than in London as London consistently outperforms other areas.

I'm not interested in the actual price, but the difference between prices in London and the town we want to move to.

morethanmama thanks for the reply. I'm aware of these issues, and that's why I'm wondering if anyone has actually done this.

I do see "seller pays stamp" advertised on properties, and I'm wondering what the actual outcome was.

It's only been on 2 weeks. But in a fast-moving market. (Yes, really. My upstairs neighbour sold his in 3 viewings and the other neighbour sold theirs on the 1st viewing).

If the market is moving like that you will likely get another less complicated offer.

Actually 3 weeks!

You need to look at comparables . As morethan says they sound on a tight budget and I bet 250k is their limit.

I've looked at a lot of other flats and I know the area and the housing stock well. I'm loathe to give an exact figure for what we'd accept as I have posted a link to the actual flat and I'm paranoid that the buyer my find it! :)

Well you are better off overall if you are not tight on your loan to value. For cash buyers or those with only a small mortgage the incentive is there.

Are you including curtains, carpets and other fittings? If you are you might be able to agree a £250k for the house plus £10k for specified fittings?

Nice idea mistlethrush ... however the flat has shutters. The other fittings don't reach nearly £2k let alone £10k!

And I don't have receipts for them anyway. Apparently you need to be very careful doing this sort of thing as the tax man takes a dim view if he thinks you're over-egging it!