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My Landlord Sold House To Their Son

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Our landlord has sold the house we rent from them to their son... We weren't told in advance. He wants to continue renting it to us though at same rent.

Just wondering if the sale price will be recorded as low as poss to keep stamp duty down? Would they have to prove the sale price somehow?

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Much as I agree that the housing market is insane surely anyone still has the freedom to sell anything to anyone for whatever price they choose whether it's a house, car or tea bags? Why does it matter to you ? Just curious

Edited by Greg Bowman

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Much as I agree that the housing market is insane surely anyone still has the freedom to sell anything to anyone for whatever price they choose whether it's a house, car or tea bags? Why does it matter to you ? Just curious

Just intrigued as to whether they'll fake the sale price to save on stamp duty (but which will reduce average price in LR stats)

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Our landlord has sold the house we rent from them to their son... We weren't told in advance. He wants to continue renting it to us though at same rent.

Just wondering if the sale price will be recorded as low as poss to keep stamp duty down? Would they have to prove the sale price somehow?

Selling at an artificially low price expressly to avoid stamp duty would be an offence, they might get away with ducking it a few grand but now that it no longer has regressive banding theres probably not much to be gained.

Edited by goldbug9999

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Much as I agree that the housing market is insane surely anyone still has the freedom to sell anything to anyone for whatever price they choose whether it's a house, car or tea bags? Why does it matter to you ? Just curious

1) he may be a second class citizen tenant piece of scum but it's his home, ffs. He has a right to know who his landlord is as he's signed a legal agreement with them. Where does he stand with a new landlord? Needs a new agreement.

2) Hmrc would be bloody well interested too both because of stamp duty under change of ownership and potential income tax liability in the future.

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Our landlord has sold the house we rent from them to their son... We weren't told in advance. He wants to continue renting it to us though at same rent.

Just wondering if the sale price will be recorded as low as poss to keep stamp duty down? Would they have to prove the sale price somehow?

I wouldn't get too hung up on the price thing but this is pretty unprofessional behaviour , selling from under you with no notice, forcing you into a position with no choice but to sign whatever new agreement they come up with.

Notice to Chris Fly-aways, see what the problem with unregulated, unprofessional, irresponsible landlords is?

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Selling at an artificially low price expressly to avoid stamp duty would be an offence, they might get away with ducking it a few grand but now that it no longer has regressive banding theres probably not much to be gained.

Wouldn't it be easy for a parent and son to transfer say £150k and show a bank statement to a solicitor, then transfer another £100k at a later date? Would HMRC have the tools or inclination to check?

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CGT is due on the market value when ownership is transferred - even if you give the asset away.

Unless it's to your wife. In which case the gain remains uncrystallised but carries forward until she disposes of the asset.

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Wouldn't it be easy for a parent and son to transfer say £150k and show a bank statement to a solicitor, then transfer another £100k at a later date? Would HMRC have the tools or inclination to check?

http://www.fridaysmove.com/conveyancing-explained-transfer-undervalue/13179

'Since 2001 the price shown on a transfer of a property will appear on the register of title at the land Registry. A buyer of a property and their Conveyancing Lawyer will therefore automatically be aware of the price shown on the previous transfer of the property. If that price, in the absence of an explanation, is significantly below the true market price at the time the transfer was made, the new buyer could be said to be put on notice that there may have been a transfer at an undervalue. If the new buyer or it’s Conveyancing Lawyers fail to make enquiries there is a risk of a court deciding that the buyer was not acting in good faith for the purposes of the Insolvency Act and of a court order requiring it to transfer the property back.'

It will likely have been done as a transfer under value.

Edited by Sancho Panza

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The vendor will be liable for CGT on the difference between the cost of the property and the open market value on the day of the sale, no matter what amount of cash passed between them.

I'm not so sure.The parents have effectively transferred the CGT liability to the son and any taper relief will start from now.

If I choose to sell a second hand car at a low price,then I'm allowed to.

A good example is when someone needs a quick sale,they discount the market rate.

Edited by Sancho Panza

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Much as I agree that the housing market is insane surely anyone still has the freedom to sell anything to anyone for whatever price they choose whether it's a house, car or tea bags? Why does it matter to you ? Just curious

There may be various reasons they're doing it.If they weren't mortgaged then I suspect it's IHT/income tax planning.

If they were mortgaged then they may have had a cash call and needed a quick sale and sold to their son as a way of keeping the asset in the family.

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Much as I agree that the housing market is insane surely anyone still has the freedom to sell anything to anyone for whatever price they choose whether it's a house, car or tea bags? Why does it matter to you ? Just curious

The thing is, if someone sells to a relative for way below market value, then besides reducing stamp duty it's a gift by another name and done to avoid any tax that could be payable if the donor doesn't live for 7 years afterwards. If it's been a rental that's been owned for some time there will also be the reduction in any capital gains tax bill.

I have first hand knowledge of a flat that was ostensibly on the open market for a then reasonable price, and subsequently sold for way below that very soon after our considerably better offer had been turned down.

It was around 2005 or 6, and IIRC our offer was for about £215K with an AP of about £225K. It actually sold for about £180K, which was way below what similar flats were selling for at the time. The EA had told us it was owned by someone at the agency - it had been a rental - so they were evidently just going through the motions of having it on the open market. I dare say it was sold to a son or daughter.

Presumably they were only going through all the official motions of listing it and doing viewings, because that way it was less likely to arouse the interest of the taxman.

Edited by Mrs Bear

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If the son bought it for a very low price, and then has to sell the property later for whatever reason, won't he get stung for a very large CGT?

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OP - you don't need to enter into a new tenancy agreement. Your existing agreement still stands. You will simply pay rent to a new landlord.

He still needs to know exactly who the landlord or their representative is and is now tied to the existing period with an indeterminate (to us) period of security for his family that could be less than what would be afforded him by a new agreement.

The original agree to is supposed to stand but the game may be changed completely from there on. It sucks.

Edited by 25 year mortgage 8itch

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If the son bought it for a very low price, and then has to sell the property later for whatever reason, won't he get stung for a very large CGT?

Quite. It doesn't seem to make much sense as a strategy even if they get away with not declaring the full gain when transferring ownership to the son. Surely, from a familial wealth perspective, better to leave the CGT with the parent - IIRC, CGT liability dies with the owner.

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Quite. It doesn't seem to make much sense as a strategy even if they get away with not declaring the full gain when transferring ownership to the son. Surely, from a familial wealth perspective, better to leave the CGT with the parent - IIRC, CGT liability dies with the owner.

Is that right? (I have no idea). So say a portfolio LL dies with a large capital gain, then he can pass on the lot with no CGT liability?

Someone should let the guys on 118 know - could be an exit strategy :)

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Is that right? (I have no idea). So say a portfolio LL dies with a large capital gain, then he can pass on the lot with no CGT liability?

Someone should let the guys on 118 know - could be an exit strategy :)

Go long on canoes.

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Is that right? (I have no idea). So say a portfolio LL dies with a large capital gain, then he can pass on the lot with no CGT liability?

Someone should let the guys on 118 know - could be an exit strategy :)

Yup, it's right - just refreshed my memory on the details (basically the initial asset value is re-set to the value at death and some CGT could be due on gains realised between death and asset disposal by executors).

The Ultimate Exit Strategy.

Reminds me of Hotblack Desiato (of Hitchhikers Guide to the Galaxy) - spent the year dead for tax reasons.

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Wouldn't it be easy for a parent and son to transfer say £150k and show a bank statement to a solicitor, then transfer another £100k at a later date? Would HMRC have the tools or inclination to check?

that wouldnt constitute a sale...this is property, and there are procedures, registrations and legals to go through.

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Is that right? (I have no idea). So say a portfolio LL dies with a large capital gain, then he can pass on the lot with no CGT liability?

Someone should let the guys on 118 know - could be an exit strategy :)

He'd have a rather chunky IHT liability instead.

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