What would you do? New Stamp Duty Rules

[Sammyjoegreen]

Hello All,

Thank you in advance for reading and any responses.
So I am sure we all have heard about the impact of the new national budget on stamp duty. I am in the process of purchasing a house for myself and my toddler which I was hoping to make our forever home. However, following yesterday's budget we're now facing almost 40K in stamp duty charges as I am not a first time buyer.
Could we still afford it? Yes but it means we won't be able to tackle any refurbishment work the house requires for a while and these are essential as I have a small child.
I am considering the following options:
Option 1. asking the seller if they might consider deducting the additional stamp duty from the purchase price or at least a portion of it. I feel bad about doing this as they have already had a previous transaction on the same house which was near completion fall through for financial reasons on the side of the buyer. They are selling as they need to downside following partner's passing
Option 2. Look for a cheaper property but I've already paid for a survey and part of the legal fees for this one. Also, there really isn't anything that is considerably cheaper in the area that would make any significant difference. Average price is about 550K. I'd have to look at moving to a completely different area far away from family.
Option 3. Continue the current transaction and save till I can afford the refurbishment work.

Help please! What would you do or are there any other options you could suggest?
Thank you.

As the seller, I wouldn’t agree to absorbing this cost for someone purchasing a second home. No chance.

You can ask the seller who may or may not say yes so no harm in trying.

But if I were the seller I would not entertain it. Stamp duty increase does not kick in until March. You are in this situation because you are purchasing a second property. This has nothing to do with the current purchase you are making so not really fair that you expect this chain to pay towards your expenses because this is your second home.
Even if you find an alternative property, you will face the same problem unless you go in with a low ball offer.

They are even saying in the news today that the increase in stamp duty will trigger a home buying rush which I agree with also, so the seller may just call your bluff and re-list to another buyer. Here is the link to todays news for reference:

https://www.bbc.co.uk/news/articles/cq52z84v0gyo

Hopefully you get lucky and the seller is a desperate seller. Good luck

The stamp duty changes for second homes came into effect yesterday. Doesn't mean the seller should pay, but OP isn't talking about something that might not affect her if the complete quickly.

It will affect OP as it came into effect yesterday. And OP is asking if seller should pay towards the £40.000 stamp duty hike. I don’t agree seller should, so I don’t understand what you mean, unless I have misunderstood your point?

Really?! The only person who would be guilty of causing the chain to collapse in this instance is the OP by expecting the seller to pay for their future renovations as they have already said they can afford the stamp duty increase.

Most posters on here agree that it is morally the wrong thing to do and very cheeky of the OP and has nothing to do with whether people are angry that it is the OP’s second home.

If the OP manages to convince the seller to do this to avoid causing the chain to collapse I hope they feel guilty! And if the seller pulls out because of the OP’s request they should feel even more guilty as they have caused a full chain to collapse!

The OP can try their luck by all means but is it the right thing to do? Absolutely not!

Your only options are 2 and 3. Option 1 is ridiculous - you can't expect a vendor to fund your tax payments, especially when it's only an issue for you because it's a second property. Vendor can just remarket and sell to someone who doesn't come with that second home baggage.

@Susanap you said the stamp duty increase didn't come in until March. I was just saying it came in yesterday.

Ok sorry, what I meant is if the OP was referring to the increase in March due to a main property purchase then maybe the seller may understand the predicament. This particular increase only affects the OP as it is a second property purchase so not really fair to put the seller in a position where they either pay for OP’s future renovations or the whole chain collapses. 👍

@Susanap oh I see what you mean, yes I agree!

If I was the seller I'd just pull out and sell to someone who wasn't buying a second home if you asked me for a £40k discount because you had another property you weren't intending to sell in the next 3 years.

She’s asking for 5-10k.

https://www.mumsnet.com/talk/am_i_being_unreasonable/5198964-to-ask-seller-to-reduce-asking-price-due-to-stamp-duty-increase

If you move into the second home it becomes your main home. Then you can sell your first flat to get the stamp back ( in 3 years) or the 1st flat is subject to capital gains from the rent from your family or the eventual sale

It doesn't make any difference who you think is 'guilty' of collapsing the chain because the effect is exactly the same. Everyone is back to square one. It's an unexpected change in tax rather than gazundering, which I agree is morally wrong.
Having said that, @Sammyjoegreen replied subsequent to my comment to say that this seller has only just accepted her offer so perhaps they may choose to re-market the property. Personally, if I was much further down the line in a property transaction, I would just 'suck it up' for the sake of 5K. Estate agents and others involved in property chains have been having huge numbers of these requests to renegotiate and some will accept a slightly lower price in order to complete the transaction. Tax increases naturally put some downward pressure on prices.

rainingsnoring Quote:
’It doesn't make any difference who you think is 'guilty' of collapsing the chain because the effect is exactly the same. Everyone is back to square one. It's an unexpected change in tax rather than gazundering, which I agree is morally wrong’

This tax is self inflicted as it’s a second home, If it’s only 5k as you so put iIt then the OP should suck it up not the seller as there is nothing wrong with the house they are purchasing, they just want someone to pay for their future renovations and for the luxury of owning 2 properties!

5-10k may be a lot of money for the seller where as the OP has already said they can afford the increase.
It’s exploiting a situation for personal gain and preying on someone when they are already down as the OP already said the seller has had a completion fall through on this house already and are selling because their partner passed away.
if you can’t afford 2 houses then don’t buy them and expect others to pay for the luxury of it.
I can’t believe the entitlement of some people nowadays!

@Susanap taxes are definitely not self inflicted. They are government inflicted and this particular tax change has happened overnight. I was referring to 5k as half of the total approx 10k increase. In this specific example, the seller may well just re-market as the offer has only just been accepted but there will be many other sellers agreeing to re-negotiate because they are pragmatic and want to sell their home. That's what happens when taxes change suddenly.

'It’s exploiting a situation for personal gain and preying on someone'
Yes, you could argue that or you could argue that the tax change has had an effect on a market and that buyers are responding to that by reducing their offers.
Equally, you could have argued that sellers raising their asking prices by 10% in late 2020 or by 20% in 2021 when the SDLT and interest rates were suddenly cut were 'exploiting a situation for personal gain and preying on someone' eg poorer, younger first time buyers, or you could say they were responding to changed market conditions. The two situations are no different.

The housing market has been constantly interfered with for decades in the UK so has not been a free market but it still is the case that higher fees will reduce selling prices and visa versa.

You are waffling and diverting attention from the OP’s personal situation at hand and completely missing the point everyone on here is trying to make.

The OP knew this was their second property when they offered a week or so ago with rumours of definite tax hikes on second properties looming in the budget. They should have budgeted for this potential and likely increase when they made their offer or waited for the budget to be confirmed.

No one begrudges the OP for improving their financial situation in life but owning a second property is a luxury and a fortunate position to be in and costs money. Don’t ‘cry me a river’ and expect others to pay for it.

That’s the point we are all trying to make.

I'm talking generally @Susanap. It's not just about the OP's specific situation. I'm not sure who 'we all' is. It seems to be just you.

Please read all previous posts on this topic and it is very clear that most posters, apart from yourself and maybe a couple of others, who agree that the OP is wrong if they do ask for the seller to pay towards the tax hike, so no, it’s not just me!

It is however mainly you who is saying that the seller should pay the tax hike!

Lets try to stay on topic as that is what the post is all about after all.

You are buying a second home and renting your property to your family your current flat ?
Increase their rent to cover it
Get equity from that flat
Nothing to do with your seller
Postpone your refurbishment

@Mickey79 Neither would I.

I would have a lot of sympathy for someone buying a first home if the Stamp duty rose overnight and would try to meet them half way if finances allowed.

But for someone buying a second home? No.

My FIL at 85 is now possibly looking at his sale falling through 10 days before completion because of this , his buyers are renting theirs out and now face around £13,000 more in stamp duty. They are definitely trying to get a reduction I know and saying it's 'not in their budget' , FIL is trying to decide .

Wouldn't it have made sense for the government to have brought these rules in from say 1st January or for new instructions - so that those a long way down the chain of buying already don't get a ton of collapsed chains when budgets alter by considerable amounts overnight?

Yes I think that would have made more sense @Crikeyalmighty

Yes it would have made more sense to have a set date however, anyone who isn’t living under a rock has been aware since 2023 that labour was looking to target owners of second properties on the tax hikes. It’s been well known for over a year.

Any second home owners must have been fully aware of this possibility and should have factored this into their expenses. Your FIL’s buyers will have the same issue with this property or any future property they purchase if this is their second property unless they sell within 3 years and then they could claim the CGT back.

They are likely trying it on for a last minute discount to see if the seller caves in. I would call their bluff and threaten to relist the property.

They aren’t naive first time buyers. They knew this was coming and second home owners can’t expect sellers to pick up their bill because of them waiting for the inevitable to happen and then just passing the bill onto the rest of the chain last minute and backing the whole chain into a corner to subsidise their lack of financial planning.

I hope your father in law stands his ground and it works out for him.

"...10 days before completion"

Have they already exchanged? Get him to speak to the solicitor but my understanding is that if they have already exchanged then the buyers are on the hook to complete regardless and if they don't then they will forfeit their deposit to your FiL.

But speak to your solicitor about this first thing.

sorry, I meant stamp duty