Using stamp duty money for exchange deposit

[bananananadakrie]

Sorry in advance if a daft question, just trying to wrap my head around it. For our new house the new mortgage + our sale proceeds cover the purchase price. The stamp duty, fees, moving costs etc. we have in savings. For exchange we need to find £23k to make up the exchange deposit to 10% on top of what we get from our buyers. If I use the money we have saved for stamp duty to cover that, will it then all work itself out on completion day once we get our sale proceeds that will then even the pot out to cover all costs again? Or do we need to find an extra 23k from somewhere? Thanks

Speak to your solicitor, they may well be able to do an undertaking with the other solicitor that they are happy the deposit is coming from completion monies. If everyone had to find 10% spare to exchange I’m not sure anyone would ever move!

We're in similar position and I was expecting (and have discussed with solicitor) sending over the 25k to cover the various fees and stamp duty and the rest sorts itself out.

Hope this is how it works anyway. Definitely don't have another 25k stashed under the sofa.

Do you actually have to give a 10% deposit? When we were mid chain, the first person's deposit covered the whole chain.

Are you sure you actually need to pay money and it isn't just a paper exercise where only the bottom of the chain pays an actual deposit?

Thanks everyone. We could negotiate but do we need to given the money is there as part of our bigger pot of costs, given it all goes to our solicitor eventually anyway? @hungry thanks for your situation, hopefully we are the same...

@wearetheheroes, we've definitely been told to find the extra 23k.

Do you know where you will find it Op? Be careful if borrowing as that can affect your mortgage.

Speak to your solicitor as that sounds unusual and obviously you need to know. Ultimately it's not costing you any more than you've agreed so the sale price of your house should then cover the stamp duty.

I have written to our solicitor! We have savings to cover it, will then just need sale proceedings to cover stamp duty.

I'm not sure that someone's else deposit can be used by you as your deposit. I believe the deposits should be held in an escrow account until the time of the sale completion.
Also with ever increasing house prices I think I only had to put a 5% down.

It's normal for the 10% deposit handed over by the bottom-rung buyers at the start of the chain to be used as the deposit for all the transactions up the chain to the top without further top up unless there is a really dramatic step-change in the transaction value at some point in the chain. So what you are proposing is unnecessary. However, equally there's nothing wrong with it. It just means that the stamp duty money becomes one of the many things paid for from the pot of equity that is (temporarily) released when your current house is sold and before all the remainder gets tied up again as part of the purchase price of the new house.

First buyer in chain, pays deposit and that’s moved up the chain. We have recently moved and benefitted from SDLT holiday, so we did not pay stamp duty this time, when we brought our previous property, we paid the stamp duty to our solicitor before exchange.

Needing to top up the deposit is unusual. Can you question this?

Just ask your Solicitor if you can use the deposit on your sale for your purchase. It is very common nowadays to do that and a lot of the time money doesn’t even get transferred, just “held to order”

@TwoLeftSocksWithHoles

I'm not sure that someone's else deposit can be used by you as your deposit. I believe the deposits should be held in an escrow account until the time of the sale completion. Also with ever increasing house prices I think I only had to put a 5% down.

What you are saying isn't correct - the other parties in the chain agree to use the bottom of the chain deposit on paper meaning no one else has to find the actual funds. It's completely normal.

I agree with trying to negotiate a lower deposit but I don’t see an issue with using your savings to top up the deposit then using a chunk of the funds from your sale to pay stamp duty once you’ve completed. It’s all just money and stamp duty is paid after the sale/ purchase.

@WeAreTheHeroes
Ah things must have changed, my solicitor strongly advised me against allowing it as if the chain went wrong the money might 'disappear'.
I did agree to it as my seller didn't have anything for their purchase deposit and it could not proceed otherwise.

This was 40 years ago. We didn't even have fax in those days...and smoking was almost compulsory!

Just wanted to update on this after everyone's replies. My solicitor did indeed confirm it was all part of the big pot that will all go through her and so fine to pay.

That's good news. However I don't understand what some of the PPs are on about - I've always topped up so the exchange money is 10% and unless specifically negotiated to be lower I expect my buyer to exchange with the full 10%.