Walking away from a purchase

[Nomorediy]

Sadly I’m going to have to call off my house sale. My survey found unexpected issues with both roofs - one with terrible issues causing leaks, the other pitched wrong also causing leaks - and quotes I got from trades showed this will cost £40k to fix inc internal water damage. The seller only offered a £10k reduction.

We are in a chain with me in the middle. My buyers will be forced to pay a lot of extra stamp duty after March 31.

Is it best to offer my buyers to split the extra stamp duty cost with them while I keep looking for another house?

If I move out and rent costs would be:

£7200 extra to rent vs paying mortgage for a year.

£2k in extra move (moving twice) and storage.

£3k on sunk legal fees and survey.

£9k in mortgage I didn’t pay off (lost equity)

But offset with £10k interest earned from putting my house deposit in a 4% notice account, minus tax.

So: £9k total

Cost of halving buyers stamp duty: £6.5k

However, buyers have given notice on their rental. Where would they go?

Now the buyers first viewed my house in July. They didn’t offer til December. So they made it tight for the stamp duty deadline.

What would you do?

TKVM.

I wouldn’t offer to split stamp duty: ultimately, nobody has any legal obligation to anybody else until exchange and it’s just the reality of house buying that you can’t guarantee timelines. It just begins a precedent of them potentially wanting compensation for other delays. But I’d also be prepared for your buyers to decide to walk away, just because they don’t want to wait for you to find somewhere else to buy. You’ve calculated the financial costs to you of going into rented, but not necessarily the non-financial elements and stresses of losing your buyer, perhaps not being able to get another one for weeks or months, not having offers accepted in anywhere you see because you aren’t proceedable etc.

Your buyers shouldn't have given notice until they'd exchanged.

I take it you mean your house purchase you are having to pull out from due to the survey?

I'm sorry for your buyers but that's just life. No you don't offer half of their increase in stamp duty. They only offered in December so it was tight anyway.

Your buyers should not have given notice until exchange. They jumped the gun here and that is on them.

You either continue with the sale of your property to them and you go into rental while you look for another property.

Or you inform them of this delay and it's up to them as to whether they continue with the process of buying from you once you have found another property.

I'm afraid this is all part of the uncertainty of property buying. Nothing is final until exchange and completion.

I wouldn’t go halves on the buyers stamp duty.
I would try again to get the sellers to reduce further as they are just going to come up against the same issue again. I would seriously consider going into rented although I would get rid of anything I would be unlikely to want in future

Your buyers shouldn’t have given notice until Exchange and it isn’t your fault they did so. It isn’t your responsibility.

I would get the EA to break the bad news to them and it’s up to them whether they wait for you to find somewhere else or walk away.

Thanks all. I am dealing with a very stubborn seller. I can’t see what leverage he has over me. Is there any I’m not seeing?

The unexpected repair costs reduce the value of his house by £35k.

What would motivate me to pay any of that? The next potential buyer would reach the same conclusion.

Thinking want leverage my buyers have. Again have I missed anything?

If they pull out of my house and decide to look for something else the buyers have to pay more stamp duty.

If they decide to look for something else they have to pay more rent.

If they decide to look for something else they have to pay solicitors and survey again.

Meaning surely they are in the better position if they wait another couple of months for me, because then at least they haven’t sunk the cost of legal/survey and the time cost of finding something new?

I’m amenable to not moving. Instead of spending 25-30k on moving I can use the money to improve my home. It’s a bit small for current needs (since I bought it I gained a long term partner) but with this money I can upgrade storage, remove a chimney breast and spruce up the garden. When I relist the house eventually it will look nicer. I spent £2k on solicitors but this work is done and can transfer to next buyer if needed?

Thanks again.

40k seems excessive, how many actual quotes have you received? Surely some your "costs" would be part of any move.

It sounds as if you are right to pull out of the purchase if the seller refuses to negotiate.
With regard to your buyers, I agree with others that it was foolish to give notice on their rental pre exchange. A very risky move! I would ask the agent to let them know that your purchase has fallen through and then they can decide whether to pull out of not. It's possible that they won't be able to afford an extra 13k SDLT upfront so may still try to negotiate down the line even if they decide to wait at present. I suspect that properties in some brackets/ areas will move more slowly and probably fall in value after 31st March unless the government intervene as usual. Overall, it looks as if you are in quite a strong position here as you don't actually need to move so would not make advance offers about paying SDLT.

Your own buyers costs so far simply aren’t your responsibility or problem. That’s just how it works. They shouldn’t have given notice on their flat. It’s not your problem that stamp duty rules set by the government are changing.

If you now feel you don’t want to move and can make changes to your existing property that’s your decision. You have to recognise this is a business transaction.

I agree with the others. There will be others buyers and other houses for you to buy.

Regarding the £10k you estimate for your deposit at 4% interest in a bank if you moved into a rental don't forget the interest on that if it takes you (or you are already) in the higher tax bracket. I forgot this and was getting almost £20k in interest (over 5% at the time) but paid £4k in tax on this as only the first £500 is tax free, versus £1k if in the lower tax bracket, so the interest above this was taxed at 40%. It might mean your £10k is less than that.

If you don't need to move, perhaps put it on hold or tell your buyers they can wait while you look again. It is their decision after working out their pros and cons.

A new roof is around £22k

How big is the house you're buying?

Hey thanks for this. Im in an expensive area for work. It’s basically two new roofs - the main one needs mostly replacing as does the flat roof on the extension, plus lining, gutters, fascia and soffits. All totally broken. Had 3 quotes. Also there’s internal water damage from leaks that require replastering.

Thank you.

I am planning tomorrow to tell my agent to tell the buyers I’m not proceeding with my purchase.

I feel bad for them but as others have said it can’t be helped.

I checked and I’d get £13k interest on deposit but no idea what the tax bill would be. I’m a higher rate payer but only have ISAs, no other investments.

There are a few nice houses that have come on that don’t seem to have broken roofs. 😆

Thank you, very helpful.

I have resolved to pull out and yes will simply inform the agents of my decision and why.

Expect that if I have to eventually accept less for my house because of the stamp duty prices will fall generally.

It's a buyers market right now so I think the current owners of the property you wanted to buy are being rather foolish.

The next potential buyer is going to be in the same position and if you have made the EA aware of the issues with the roof then they will legally be obliged to disclose that to anyone else wanting to make an offer.

If you still want the property then I'd remind the EA of the above and give one last chance to reduce the price or you'll walk away.

In the meantime I'd be looking at other properties in the hope you can find something else quickly to keep the chain alive.

I wouldn't though offer money to your buyers at this point.

They were presumptive in giving notice prior to exchange.

The fact is that English house purchase process needs a major overhaul.

IMHO the sellers should pay for a full (not basic) survey that all potential buyers can have access to when they make an offer.

Also when an offer is accepted it should be binding at that point to avoid gazunping and gazundering.

I pulled out of two house purchases during the Covid housing disaster. The first needed £25k of work - the seller didn’t agree it would cost that much.

The second seller kept threatening to put the house back on the market if I didn’t make the searches happen more quickly - outwith my control, Covid delays. The third time he made the threat I told the EA he should go ahead and started viewing more houses. He had to accept £10k less from the next buyers.

Your buyers were hasty in giving notice and took that risk knowing they were in a chain. I wouldn’t offer half the stamp duty. The price of your house might fall - but other house prices will fall when the rise in stamp duty comes in.

You don’t pay tax on ISA interest.

I would look for another house and hopefully you might find one with no chain. Fingers crossed 🤞

This!

We are due to do simultaneous exchange and completion on Friday this week and haven't given notice to our landlord yet in case it doesn't happen.

Yes we have to pay another month rent but better that than without a home at all.

The buyers viewed in July but didn't offer until December? They should have realised their chances of getting an entire chain over the line within 3 months was a long shot. I think people are very unrealistic right now about how long the conveyancing process takes. Lots of tales on here about offer to completion taking several months. We will be 6 months when done, which will now be next month. We've been chain complete since September. FTBs should have been offering the middle of last year to be fairly sure of getting over the line by end-March. So I don't think any of that is on you.

You are doing the right thing for you and that’s all that you can do.

These things happen the whole time and I speak from my own experience where it has cost me wasted money.

The agent is keen for me to move into rented.

But I disagree as my buyers can either wait to buy my house and pay extra stamp duty or go back to square one, right??

Of course the agent wants your sale to go through, their commission is based on it!

The agent wants their commission from the sale and potentially to get you in a rental through them as well…they are thinking of their own best interests not yours and you need to stay focussed on yourself not let them sway you into something you don’t want

You need to do whatever works best for you. If you want to speed through with the sale of your home and look for your next home at your leisure, then you should definitely consider renting. If this is not a priority and you want to wait for a complete chain, then say no as long as you are prepared for your buyers to possibly pull out or try to negotiate on the SDLT costs.

As the others said, the agents don't want the whole chain to collapse as they want to be paid!

The agent wants the commission. It’s so much hassle moving into rented and then moving again when you buy.

Thanks all. I pulled out and have started my search again. It’s a bit rubbish for my buyers but they have now secured a month by month extension of their rental contract.

Fingers crossed this resolves itself.