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Original poster

Advice please: cost caused by seller's delay

237 replies

moniack · 03/04/2016 00:29

Hi, I'm a first time buyer in London. BF and I had our offer accepted on a house at the beginning of Dec 2015. We were told there was no chain but the seller was very, very slow with providing legal documents (only got them by the end of Feb and still some outstanding questions). It turned out that there is not only a chain, but a very complicated one with selling two to buy one, family inheritance issues blablabla... The seller said twice that they were going to exchange but then later cancelled because their seller couldn't exchange with them that day. From what the agent told us, they missed the April 1st stamp duty deadline because of their seller's fault. They had to re-negotiate and their seller agreed to compensate for that. It seems that if we pull out now, it's going to leave them over a shit creek without a paddle. But both BF and I are really pissed off, they just assume that we are desperate and never going to change our mind so they would only exchange when it's completely safe for them, not to mention lying to us from the very beginning. We are now thinking of asking for a reduction, not a greedy one, just to cover the last two months rent, something 3k, less than 1% of the house price.

People who have sold houses before, could you be so kind to advise if it's a reasonable thing to do. We can afford to lose the house as we actually budged higher than this current house and the stamp duty thing may cool down the market a little bit now. But I don't want to create bitterness and worried they might accept and then do some damage to the house before they leave. (they seem to be quite selfish people judged from their behaviour).

Thanks again.

OP posts:
Original poster
moniack · 03/04/2016 16:19

To LittleBearPad,

Our rent is actually significantly higher than mortgage payment, as we got a 50% deposit. I don't know why people keep mentioning the interest and capital, can I tell the bank that "ok, it's just interest so I don't need to pay you?" Isn't my interest payment part of the investment to get the house, while rent is just money giving away? I refuse to comment further on this issue.

Also if you think in short term house price is going to stay the same or fall, then what can we lose by gezundering or pulling out? I think you are the one who get it wrong by assuming it's "completely safe" to leave your buyer waiting. Yes you won't exchange unless your seller is ready, but your buyer may lose patience. In a word, you just can't be 100% safe in a chain. If you think you are, then you may face a nasty surprise.

Anyway, I had a discussion with BF just now and we agreed to set a ddl now. If they exceed that ddl, then they have to pay extra penalty, or we walk away, which I think would harm them more than us.

OP posts:
Original poster
moniack · 03/04/2016 16:23

To ervybuddy,

So it's basically like what you advised? Thank you for being so helpful. Let's see how it goes.

OP posts:
wowfudge · 03/04/2016 16:25

Good luck OP.

evrybuddy · 03/04/2016 16:30

Is it hypothetical though?

The point is that anybody - everybody - who rents, loses their money compared to those who buy - regardless of the specifics of the OP.

The specifics of the OP's case highlight the individual losses suffered when there is an understanding, an agreement to buy, but one party prevents the other from completing - dangling as it were the golden egg in front of them, but refusing to allow them to put their money into the house and instead, causing them to continue to rent.

Morally, the OP feels wronged, and perhaps she has been wronged, she feels she was promised an opportunity which is now being seemingly maliciously dangled.

But in practice - there is probably nothing to be done except take it or walk away.

LittleBearPad · 03/04/2016 16:30

There is no such thing as a real total mortgage debt. That's the problem with your immensely hypothetical situation. It assumes that the interest rate is constant throughout the whole mortgage and no one moves, overlays, takes a payment holiday etc.

Paying capital off a mortgage amount is measurable. Because it's a fixed amount that is actually owed. No mortgage company sends out statements showing the total amount including interest because no one will ever pay that exact amount back. It's merely illustrative on the mortgage agreement.

In your example the OP could pay £6k in rent over 6 months or £11k in mortgage payments. She would still only have reduced her mortgage (which is the bit that actually matters) by £1k or so. Given it would appear she's only been delayed by exchanging by 2-3 weeks the loss is negligible.

And no one on this thread is saying there's no benefit to buying versus renting.

Gazelda · 03/04/2016 16:33

OP, I presume you're going to let your solicitor deal with this on your behalf? I think you should avoid mention of penalties etc, your legal representative will know the best way to get your wishes across.
Good luck, let us know how it goes.

LittleBearPad · 03/04/2016 16:35

You've been delayed by three or so weeks. Believe me I do understand it's a very frustrating process. I was seven months pregnant when our chain collapsed because our buyer was an arsehole.

However where there is a chain people have to know there are no outstanding issues anywhere in the chain to exchange. That's how UK house buying works.

evrybuddy · 03/04/2016 16:36

But you don't have a choice over whether you pay the interest or not.

You have to pay it - it is as real as the capital element of the debt.

You would not rely on capital repayment as the only way to create equity in your home.

LittleBearPad · 03/04/2016 16:39

Also if you think in short term house price is going to stay the same or fall, then what can we lose by gezundering or pulling out

You pull out or they tell you to get stuffed. Then you will lose your survey fees, legal costs (probably a 50% discount) plus you get to pay them all again when you do find something else. Plus you'll be paying rent for longer and you get to spend more time house-hunting rather than enjoying the summer.

LittleBearPad · 03/04/2016 16:41

But the interest isn't quantifiable over the long term. No one will have the same rate over 25 years etc. The total paid is wholly theoretical.

evrybuddy · 03/04/2016 16:48

The OP would logically conclude from this thread that there are a lot of people on here who don't like the idea of FTBs being uppity because they all already own their own homes - yet they persist in telling her to see things from the vendor's position.

How rich is that?

How many people have advised her to stick with a purchase which she clearly feels has no prospect of completing?

The conventions of the UK property market are such that it should be clear that she will not be compensated for past rent paid - no matter how much at fault or misleading the vendor has been.

But, the OP has had enough.

She is perfectly free and correct to draw a line in the sand and tell the vendor that after a certain date she will take no more messing about.

That is the only way she will get the vendor to reveal the truth.

The OP knows this could result in her losing this house or having to walk away and find another.

Why are so many people biased towards her strung along further by the vendor?

evrybuddy · 03/04/2016 16:52

But the interest isn't quantifiable over the long term. No one will have the same rate over 25 years etc. The total paid is wholly theoretical.

But you accept that there is a monthly payment which is generally fixed and is only altered when their is a change in interest rate or some significant repayment of capital etc etc.

You would accept that the monthly payment will comprise capital and interest and that is has to be paid and both capital and interest contribute to the reduction of the overall debt.

The debt is not capital alone. It is also interest

Whereas... the total amount of rent is gone and none of it will ever be recovered.

Peaceandloveeveryone · 03/04/2016 16:53

I did tell her that I think she should walk away. I think it might be the tone of her posts that influenced some of the answers, it's easy to misinterpret online but it came across to me (wrongly perhaps) that she was being a bit stroppy- I was gazundered too once and it was on the day of exchange, probably we all bring our own experiences to the table.

LittleBearPad · 03/04/2016 17:03

But of your £1,842 per month a significant proportion will be interest. Once paid it is gone too.

Blu · 03/04/2016 17:10

Op: your gamble.
As FTB it is more likely than not that any place you buy will have some sort of chain. So you could end up waiting another 6 months if you start again.

I have bought 4 times now: first time, as FTB with no chain took more than 4 months, and none have been quicker, often 5 or 5.5.

You could end up cutting off your nose to spite your face.

Original poster
moniack · 03/04/2016 17:49

To Blu,

There are lots houses marketed as no chain, so was ours. I'm a bit worried they are all lies. Is it the case?

OP posts:
specialsubject · 03/04/2016 18:15

in my very small experience the only time that 'no chain, we'll move into rental' is true is when I sell up! (or when the occupier of the house you are buying has died)

being treated as little people is sadly quite common. Don't cut off your nose to spite your face - we nearly did, but I'm sitting in the house we bought now and am very glad we didn't!

Original poster
moniack · 03/04/2016 18:37

To evrybuddy,

Thank you so much for being so understanding and helpful.

OP posts:
Teaandcakeat8 · 03/04/2016 18:59

Well I bought a house with no chain and it still took 17 weeks! Awkward sellers are everywhere and you just don't know what problems will be thrown into the mix.

Do you know exactly what is still outstanding? Explaining to your estate agent that you cannot afford to pay any more rent might help to put pressure on.

evrybuddy · 03/04/2016 19:35

But of your £1,842 per month a significant proportion will be interest. Once paid it is gone too.

It's not gone!
It's reducing your total overall debt and bringing you a step closer to owning your home outright.
You would accept that interest = the cost of borrowing?
It's an extra price you pay because you want to buy a house but you haven't got the ready cash?
You can't avoid it if you have a mortgage.
It is part the 'Real World' price of your house.
Over 25 years you will get every penny and more of it back.

Rent is an absolute loss - there is never any possibility of getting any of it back.

Original poster
moniack · 03/04/2016 19:37

To those who said they won't exchange until 100% safe:

There is no 100% safety in a chain. While you think exchanging with your vendor means 100% safety, that's based on the wrong assumption that buyers will never walk away.

Yes, buyers are less likely to walk away, because we have paid for things, but the consequences of buyers walking away at last minute is not sweet. If everyone in the chain seems to take it for guaranteed that uncertainty should be passed on to buyers, then don't complain when they pull out and the chain collapses.

OP posts:
evrybuddy · 03/04/2016 19:38

Anyway, good luck OP!

Hope it all works out either way.

evrybuddy · 03/04/2016 19:42

Cross-posted there with OP - well said!

It's give and take and it sounds like you've had enough of being taken.

Sometimes, all it takes is putting your foot down to show people you've been pushed far enough. Like you say, there's a lot at stake for them too.
It might take a bit of hard talking to make them realise it.

wowfudge · 03/04/2016 19:53

Oh for goodness sake - once you have exchanged, if you don't complete then the person whose fault it is gets sued and as a minimum, providing they are not at the top of a chain, loses their deposit. There is no certainty in life except death and taxes.

LittleBearPad · 03/04/2016 19:54

Over 25 years you will get every penny and more of it back.

Only if house prices increase significantly. They have in past years but there is no guarantee that this will continue to be the case.

And interest doesn't reduce a total overall debt. There is no total overall debt owed. It is a charge for borrowing money. In the same way that rent is a charge for 'borrowing' a house. The debt owed is the capital owed.

There is no 100% safety in a chain until you exchange, no. Once exchange happens then the cost of pulling out will likely make most people think twice. Which is why contracts aren't exchanged until everyone can proceed.