Question: I am about to exchange contracts on a leasehold property priced at £160,000 which is a new build/conversion. The developer had also agreed to pay my stamp duty.
© Malcolm Willett (www.willett-ink.co.uk)
In view of the Chancellor’s stamp duty concession announced recently on properties up to the value of £175,000, I assumed this benefit would be passed onto me.
However, on checking with the developer he has offered to split the difference of the stamp duty concession and pay me £800. In other words, the developer is benefiting more from this concession than the purchaser! Your objective views please?
Answer: If the Stamp Duty Land Tax (SDLT) threshold had never been increased your seller would have paid your SDLT of £1,600. In practice, I expect that on completion your seller would have given you an allowance so that your own solicitor would have been holding the funds to discharge your liability for SDLT.
The threshold has been increased and so consequently your seller no longer needs to pay SDLT of £1,600. You feel that your seller is benefiting and you are not, but in reality your position remains unchanged. You were never going to be paying your SDLT as your seller had assumed responsibility for it and in reality was giving you an incentive to buy the property.
In my view, your seller is being reasonable and fair by offering to give you 50 per cent of his saving. By the way, if you are obtaining mortgage funding to assist you with your purchase of the property your solicitor must disclose to your lender that your seller will be giving you an allowance of £800 on completion.
Indeed, if the original situation prevailed and your seller had been paying the SDLT that fact would have had to have been disclosed to your lender by your solicitor. Such incentives sometimes affect mortgage offers.
What's your problem?
If you have a question for Fiona McNulty, email firstname.lastname@example.org. We regret that questions cannot be answered individually.
Fiona is a partner in the property team at Thring Townsend Lee & Pembertons Solicitors www.ttuk.com.