Buyers don’t have money for stamp duty

[PrettyFox]

In the process of selling and buying. 9 weeks in and process has been smooth so far, everyone collaborative and it looked we were ready to exchange this week.

The buyers own a flat that they were not intending to sell for now and were hit with the recent increase in stamp duty rate for 2nd properties. They claim they don’t have the money to pay the difference (approximately £9k) and their suggestion is everyone else to wait for them to sell the flat.

Estate agent say they are not open to ask for loans. I suggested then they decrease the deposit amount and increased the mortgage amount, same dismissive answer from the agent, “this is not something they are open to do, it will likely change their rate etc etc”. I find very unlikely that £9k added to the mortgage would have a very significant impact in their eligibility, interest rate or monthly payments, or am I missing something? They would need a new product but surely worth to explore with their broker if it could save us all time?!

Feeling quite pissed off over this as the buyers can get a tax refund if they do sell the flat in the next three years; or potentially can even maintain two the properties depending on their final monthly payments and rent they will be getting from the first flat. It’s seems to me a very privileged position where they just have to find a short term solution but won’t be losing money in the end. But the estate agent kinda suggest that the only option is to wait! I lost my patience today and said that isn’t reasonable.

I really want the house we are buying and spent £££ in the process but I’m not comfortable at all with how passive the agent is and how our buyers, who are the ones with less to lose in the entire chain, seem unwilling to try and sort a solution.

What would you do? We received several offers for our property but we had two first time buyers changing their mind early on the process, so we do feel quite disheartened with the idea of going back to the market.

Sorry for the long post, just needed to vent, feeling very sad about this…

If you are quite a way along in the process, I’d meet them in the middle and offer a £4.5k reduction as long as they complete within a certain time frame. I couldn’t be bothered with the chain falling over for the sake of £4.5k.

I’d also be giving the agent a strong talking to. Their job is much more than just listing your property on Rightmove. They should be working their arses off to broker a deal here.

We've found ourselves in the same situation as of yesterday. They want us to pay 5k or their sudden 10k increase and say they simply can't afford anymore and feel it's a fair way to split it! Our house didn't sell easily and the idea of going back to square one is horrible. I don't know what to do but for us that 5k genuinely is hard to find. I'm so angry and frustrated that it's taken them over a week to realise.

Put something in writing to the agent to pass onto the buyers and ask for a reply from them in writing in xx timescale - puts some pressure on agent to actually negotiate and do something!

lots of people are talking about trying to split the extra the very unexpected and last minute cost so you’re not the only chain in this situation sadly.

id also split if it guarantees the sale still happening

Absolutely, I wouldn't mess about, they are saying they cannot afford to buy your house, so for now they are interested, not buyers.

Get the EA to put your house on the market again with immediate effect, but to tell them if they become proceedable before another buyer comes along you will sell to them as planned.

That gives you the best chance of still selling to someone in the requisite timeframe.

Just think - there's another thread on here about a buyer whose vendors have dropped out at the last minute, and they stand to lose £3.5k in legal fees because of the late failure.

Your buyers will be about to throw away thousands in legal fees for absolutely no reward if they drop out now because they want to force you to pay their tax. Are they really likely to choose that option? They are liars and trying to bully you. Don't let them.

Of course it will change their LTV in £9k and can potentially push them for a higher rate - but how likely is that increase to be so significant? Is it ideal? No. But we are in this position and a compromise might be needed.

They are still in a privileged position where they can ask for a tax refund if they sell the flat or will be getting rent from the first property if they decide to keep it. If the problem is short term liquidity this would solve it unless they are indeed borrowing in the absolute limits of their affordability (it can be the case).

Thank you everyone for your helpful advice - it was reassuring to see we are not being unreasonable!

We actually got an offer £15k higher from people that were not proceedable for having to sell their flat!

I think you are absolutely spot on. It’s not our place to try and find solutions, and second guess their financials. It’s simpler than that: or they have the money to go ahead now or not.

Me too.

I’m so sorry you are also going through this. So, so unfair. Hope you find a solution too.

Except by re-listing your property you put your new house at risk as you are putting the sellers of your new property in the same position you are currently in.

If you love your new property and have spent a large sum in legals already, it is in your best interest to help your buyers find a solution.

They don’t seem willing to discuss options, just want everyone to wait. That’s part of the problem.

I love the new property, I have spent money and time, I want to make this happen. But I really don’t think the chain will wait indefinitely for their situation to be sorted. It’s a significant amount of risk to everyone up in the chain.

Maybe they are hoping that you will suggest dropping by 9K to keep things moving along, rather than wait for a flat to sell. That way, the need to reduce comes from someone else rather than them.

Honestly though, its not going to be quick with them. They have to list their property first, find a buyer and then go through the conyancing process - there is much more risk involved with flats than a house (lease issues, planned work issues etc). Flats following covid and grenfell have become much less desirable. What if they go through this whole process then their buyer pulls out part way through ? You really might find someone more proceedable if you re-listed.

I think I agree with you though, that someone who can afford two properties should be able to afford the extra 9K.

Have all those in the chain been asked if they will reduce by 4.5k? That's what normally happens in this scenario.

This - if they are young as you say they may have reached their limit.

maybe go back to these people - they could have sold their flat by now

https://www.merriam-webster.com/dictionary/greedy

It's not RR's fault they want two homes 🙄

I really think your best option is to re-list, they are effectively in the position of (saying) they can't afford your house.

If you instruct the agent to re-list you will find the agent is very much incentivised to make it work.

However, if it doesn't you already have the ball rolling on getting the property out there for a new buyer, which will still permit you to sell and buy what you want.

Its the least worst option and keeps both options open for now, whilst not wasting time.

You probably have nothing to lose by putting it back on the market. If there's been no interest after, say, 4 weeks, you could always go back to your buyers perhaps with a slight price reduction and it's unlikely the people you are buying from would have found another buyer by then. It's not reasonable to expect you to leave it off the market while they sell. House prices may have risen by then. It may also jolt the useless estate agent out of passivity. While you're at it, maybe switch agent if you aren't tied in. They should be working for you, the people who are going to pay them an eye watering amount, not the buyer. Good luck.

I thought that applied to second homes but not buy to lets, or am I wrong? If so they could just rent out the flat for a bit and avoid it (assuming they own it outright and therefore wouldn't need to switch to a BTL mortgage, but even then probably still doable).

This is where the agent needs to start earning their money. Remember, the agent works for you, you are the one paying the huge commission. It is unacceptable for the agent to be so dismissive. He/she needs to get on the phone to them and negotiate a deal or have another buyer lined up sharpish.

They are hoping that you are desperate to sell and will offer a reduction on the selling price.

It really depends how desperate you are.

No, it applies to all second homes, BTL or not, it doesn't matter.

Go back to the agent - those people may now be proceedable.

Totally agree with this. This agent sounds appalling.

Sounds like the EA dos not want to expend any more time and money on remarketing (profit gone) so easiest and cheapest option is to sit and wait.