Why is stamp duty so expensive?

[StuntNun]

We got our mortgage agreement in principle through last week and a house has just come on the market that is perfect for us but it's right at the limit of the amount we can borrow. I've just checked and the stamp duty will be £19,500 which takes the house out of our price range unless I find a check for 20 grand down the back of the sofa

It's so frustrating that we're trying to get on the property ladder and this huge bill is standing in the way. I wish we could pay it off in instalments. I wonder whether it's possible to get a loan to pay the stamp duty? Our current rent is about £400 higher than our monthly mortgage bill would be which might make a loan manageable.

I know, it's a bloody scandal, just another landtqx.

It's not even so much the cost as the tight deadline for paying. With other large tax bills they give you the chance to pay it off installments. I know I just have to suck it up and look for a cheaper house. Or try and get a loan of £20k for five years!

Its a 600k house???
Offer 30k under (5%), agree at 20k under, and put down 20k less deposit?
Or is everything going at asking price in London (I'm guessing that's the only place FTB are spending that amount?)

Be aware that although the HMRC website says you have 30 days to pay, most solicitors will not complete until they have the funds to cover stamp duty.

Can you get a bit more on the mortgage to cover this?

Definitely don't get a loan to cover it, most although I think all actually mortgages are only valid to release funds if there aren't changes to your credit or affordability in the interim, so if they see you've suddenly taken out a 20k loan they'd be within their terms to revoke your mortgage.

Well, they might not care about a 20k loan provided it doesn’t affect affordability

But I am surprised this didn’t occur to you before you set a budget to be honest OP.

I know just about to pay nearly £57k.

Glint I knew the house was above my budget before I went to view it. If they'll take £20k under the asking price then I can probably make the finances work but apparently they've refused an offer at £25k under so I don't know whether that's likely.

A second offer well below may mean they have a reality check!

But you say you’re “just trying to get on the property ladder” but also buying a £600k property- you’re hardly squeezed for choice!

A 600k house is not really first time buyer territory, even in London!

Because socialism.

Buy a cheaper house that you can afford and the stamp duty will be less. Surely if you can afford a house of £600k you must have a very good income? Save for a bit longer or buy a cheaper house. It's not hard and I find it hard to make my heart bleed for someone complaining about a tax bill of £20K, you must be able to afford it (and I say that as someone who has just bought a large 4 bed so it's not like I'm suffering from jealousy).

But if you are buying with nothing to sell that may make you attractive to the vendor. Worth putting in an offer you have nothing to loose .

Rich person whinges about tax bill in shocking new development.

Stamp Duty is an evil but genius tax.
Want the house to be legally registered in your name? - then pay the tax.
They have you over a barrel. It's the one tax that nobody wants to evade.
Evil but genius.

If you're trying to get on the property ladder and have that much stamp duty then just go for a cheaper house?! 600k isn't standard first time buying anyway, even just outside of London that is excessive!

It’s excessive IN London

Its not excessive for a house in London. I sold a 2 bed/2 reception house for 600k in zone 3 SE London in frankly fairly shite repair in June.

You don’t need to spend that though. My DH sold a £800k flat last year, doesn’t mean you have to spend that either.

A friend recently paid around £90k on stamp duty. You can still buy a house for that price in our region

Good suggestion Dunes thank you. We could probably manage at 30 under.

Custard I think you're right and it would be risky to try and apply for a loan anyway.

Sidney that's one hell of a tax bill!

Glint we're currently renting but we live in the South East of England and have four children. We're hard pressed to find a four-bedroom house in our area for less than £600k. We only moved to the area two years ago so we don't want the children to change schools again, particularly as two of them have special needs.

CountFosco yes we have a good income but it's skewed by the amount we're paying on rent so we're unable to save any more money. Stamp duty does seem to unfairly penalise people who live in areas with high house prices. A four-bedroom house in Northern Ireland would be about £200k; here it's £600k for the same house.

You could take out a loan, if you do this make sure you find a solicitor who doesn't mind you paying the stamp duty after completion - you don't want to put a loan application through before incase the mortgage co do a last minute check before releasing funds a new loan could really change the affordability for the mortgage.

Other option is to try and negotiate the price down or shop for a cheaper house. It may feel like the hard way but at least you will calculate all potential costs for the next one 💐