Sdlt Surcharge - Blown My Chance Of House Purchase

[BarkingDogs]

I've just had a buyer pull out after 4 (!) months. I was just about to exchange contracts & move into a cottage that I'd set my heart on.

So, I rang the agent, explained my situation & told them that I could get a let to but on my current house so as not to lose the new property. Vendors were ok with this.

Then, after further investigation, I discover that the stamp duty surcharge applies whenever you buy a second property - even if it's going to be your primary residence & , in my case, it's a whopping £10k extra & I just can't afford it. I know you can claw it back if you sell within 18 months but I can't comfortably afford to front this money so the deal is off.

I'm just so annoyed about this - it seems really poorly thought out. There must be loads of people in my situation who need to let to buy because they can't sell their house for whatever reason or perhaps need to relocate for a couple of years and don't want to rent in the place they are moving to so need to purchase a second home as their main residence.

My understanding is that this is still in consultation but will come into effect after April 1. Anyone know if there are likely to be any last minute changes or if there's anywhere it's possible to get your thoughts heard over this apparently poorly thought through piece of legislation?

[Cosmic Apple]

You can afford to bridge (cash in bank or loan) on a 300kish house but don't have 10k spare to loan to the treasury? I call troll.

[BarkingDogs]

You can afford to bridge (cash in bank or loan) on a 300kish house but don't have 10k spare to loan to the treasury? I call troll.

Havent even thought about bridging loans TBH.

As for the 10k loan, I only get that back if I manage to sell within 18 months - not sure about the logistics of that when I have tenants in situe.

Its typical sledgehammer to crack a nut - Im not a BTLer ffs!

I've even heard that they're even going to apply this surcharge to people who have a holiday home abroad when they buy another property. Completely iniquitous. Then again, as an IT contractor I know all about tax grabs by successive governments.

Oh, thanks for the helpful advice - what kind of a forum is this? Got better advice on contractoruk.com

[GreenDevil]

Of course George looks after his own, if you have 25 properties your exempt. Scumbag.if he wants to bring it in bring it in for everyone.

[Neverwhere]

Havent even thought about bridging loans TBH.

As for the 10k loan, I only get that back if I manage to sell within 18 months - not sure about the logistics of that when I have tenants in situe.

Its typical sledgehammer to crack a nut - Im not a BTLer ffs!

I've even heard that they're even going to apply this surcharge to people who have a holiday home abroad when they buy another property. Completely iniquitous. Then again, as an IT contractor I know all about tax grabs by successive governments.

Oh, thanks for the helpful advice - what kind of a forum is this? Got better advice on contractoruk.com

If you had tenants and a loan against the property then you would be a BTLer. In fact you would be the typical BTLer as the majority only have one BTL and don't consider it their fulltime occupation. You are exactly who this tax change was designed to target.

As correctly pointed out you could get a bridging loan and still sell within 18 months (if you price your property competitively for the local market then it will sell) and the fact that you clearly don't want to sell within 18 months just reaffirms that you are looking to become part of the current housing problem and monopolise two residential properties for a significant length of time and/or hold out for the highest price possible. Why on earth would you think that would be well received on a forum called housepricecrash?

The whole idea that your buyer scr*wing you over is somehow the fault of the Treasury is just nonsense. If the same thing had happened before 1996 and the invention of BTL, before lenders gave you the option of securing investment finance against residential property thus preventing price discovery and a properly functioning housing market and contributing to financial stability risk and collapse of two lenders in the financial crisis, you would have been pissed off at your erstwhile buyer first and foremost.

If you don't want to deal with the vagaries of chains then sell your current house first and rent while you look to buy chain free.

That there is pressure on you to sell and not become a (not really accidental) accidental landlord is exactly the point. These are the intended consequences of this tax change. Good to see that they are making people think twice about becoming amateur landlords and stuffing up other people's chances of owning homes of their own. If you hold on to more than one property that obviously means another family can't even have one, because you have decreased the stock of housing available for owner occupation.

Keeping your previous property when you move up the ladder is like pulling up the last rung behind you so nobody else can get on. (h/t WTW)

[Neverwhere]

Of course George looks after his own, if you have 25 properties your exempt. Scumbag.if he wants to bring it in bring it in for everyone.

As currently proposed he is bringing it in for everyone and people with 25 properties (or any other high number) are not set to be exempt. There is a mooted exemption for large linked transactions to encourage developers but even that is not yet certain.

[BarkingDogs]

As correctly pointed out you could get a bridging loan and still sell within 18 months (if you price your property competitively for the local market then it will sell) and the fact that you clearly don't want to sell within 18 months just reaffirms that you are looking to become part of the current housing problem and monopolise two residential properties for a significant length of time and/or hold out for the highest price possible. Why on earth would you think that would be well received on a forum called housepricecrash?

The whole idea that your buyer scr*wing you over is somehow the fault of the Treasury is just nonsense. If the same thing had happened before 1996 and the invention of BTL, before lenders gave you the option of securing investment finance against residential property thus preventing price discovery and a properly functioning housing market and contributing to financial stability risk and collapse of two lenders in the financial crisis, you would have been pissed off at your erstwhile buyer first and foremost.

If you don't want to deal with the vagaries of chains then sell your current house first and rent while you look to buy chain free.

That there is pressure on you to sell and not become a (not really accidental) accidental landlord is exactly the point. These are the intended consequences of this tax change. Good to see that they are making people think twice about becoming amateur landlords and stuffing up other people's chances of owning homes of their own. If you hold on to more than one property that obviously means another family can't even have one, because you have decreased the stock of housing available for owner occupation.

Keeping your previous property when you move up the ladder is like pulling up the last rung behind you so nobody else can get on. (h/t WTW)

Believe me, I don't want to become an accidental landlord. I just don't want to lose the property we've set our hearts on.

I'm going to look into bridging loans though so thanks for that - I just assumed there would be a monumentally high interest rate premium so never really thought about it.

Nothing ventured, nothing gained I guess.

[Neverwhere]

Believe me, I don't want to become an accidental landlord. I just don't want to lose the property we've set our hearts on.

I'm going to look into bridging loans though so thanks for that - I just assumed there would be a monumentally high interest rate premium so never really thought about it.

Nothing ventured, nothing gained I guess.

Glad to hear it.

The other thing to consider is whether or not the sellers of the property you are interested in have another buyer lined up, and if they are themselves in an onward chain? If you pull out might they be in exactly the same position as you feel that you are in now? You may find that you have more leeway than you realise.

It's also worth considering whether cutting the price of your current property, or sending it to auction with a reasonable reserve price, in order to secure a quick sale might cause you the least hardship overall once bridging costs, money already spent on surveys, and emotional attachment to the property you are looking to move into are all taken into account?

If you know why your buyer pulled out that might also be useful information. If it was for personal reasons then that doesn't really tell you anything, but if they had problems securing a mortgage at the agreed price then it might help you to know why (and whether the sale would be back on with an acceptable reduction).

It may be hard to hear but it's also worth looking around to see what else is currently on the market. You have set your heart on this property but that doesn't mean that another one couldn't win it if given the chance. This will also give you some idea of how quickly the local market is moving and whether or not the property you are looking to buy really is, with a dispassionate eye, all that different to others that are on offer. Gauging this may help you to get a good idea of what position your sellers are in and how much time you might be able to buy to find a new buyer for your current property.

I hope you get the property that you want, but if you don't remember that it really is your buyer pulling out at the last minute that fundamentally caused you these problems. The government have to consider the wider social consequences of individual actions and they are duty-bound to put these first (not that they always do). If the situation were reversed and you were a priced out working family just wanting to buy your first home, not even thinking about being able to afford one nice enough that you would set your heart on it, then maybe you would see the changes differently.

[Cosmic Apple]

As for the 10k loan, I only get that back if I manage to sell within 18 months - not sure about the logistics of that when I have tenants in situe.

What tenants? I thought this was your old house? You'd let it out while its on the market? Poor tenants.

I considered recently doing it, buying another house that we intended to live in using cash I already had as a deposit rather than the equity in my current house. The house needed some work so I'd get the essentials done on it first before we moved in. We'd then move out of the current place, replace things that are hard to do when your living there (bathroom), finish some refurb and sell at a competitive price to complete before the 18months were up (I'd probably break even after the new garage, kitchen, bathroom and refurb work I've put in since buying in 2011). Never happened as my offer was too cheeky on the house I wanted.

In that scenario I'd need to pay the ~6k SDLT and claim it back later. What I was getting at is that if you had the cash for the deposit on the new place why did you not have 10k to spare? Did you try to negotiate some cash off to lower your deposit requirements and use the cash for the SDLT? How about a personal loan (iirc guy at work just bought a car and was looking at ~3% ish on a loan) to cover it?

Plenty of avenues available to someone wish enough cash to do what you are thinking about.

Don't know about getting tenants in when you intend to sell though.

Edited March 7, 2016 by My Name Is ??

[BarkingDogs]

What tenants? I thought this was your old house? You'd let it out while its on the market? Poor tenants.

I considered recently doing it, buying another house that we intended to live in using cash I already had as a deposit rather than the equity in my current house. The house needed some work so I'd get the essentials done on it first before we moved in. We'd then move out of the current place, replace things that are hard to do when your living there (bathroom), finish some refurb and sell at a competitive price to complete before the 18months were up (I'd probably break even after the new garage, kitchen, bathroom and refurb work I've put in since buying in 2011). Never happened as my offer was too cheeky on the house I wanted.

In that scenario I'd need to pay the ~6k SDLT and claim it back later. What I was getting at is that if you had the cash for the deposit on the new place why did you not have 10k to spare? Did you try to negotiate some cash off to lower your deposit requirements and use the cash for the SDLT? How about a personal loan (iirc guy at work just bought a car and was looking at ~3% ish on a loan) to cover it?

Plenty of avenues available to someone wish enough cash to do what you are thinking about.

Don't know about getting tenants in when you intend to sell though.

I don't have enough cash though....

I've gone back to the vendors & told them I'm going back on the market -hopefully for a quick sale. My mortgage offer is valid until August & they've been on the market since last May so hoping they'll wait.

[BarkingDogs]

Glad to hear it.

The other thing to consider is whether or not the sellers of the property you are interested in have another buyer lined up, and if they are themselves in an onward chain? If you pull out might they be in exactly the same position as you feel that you are in now? You may find that you have more leeway than you realise.

It's also worth considering whether cutting the price of your current property, or sending it to auction with a reasonable reserve price, in order to secure a quick sale might cause you the least hardship overall once bridging costs, money already spent on surveys, and emotional attachment to the property you are looking to move into are all taken into account?

If you know why your buyer pulled out that might also be useful information. If it was for personal reasons then that doesn't really tell you anything, but if they had problems securing a mortgage at the agreed price then it might help you to know why (and whether the sale would be back on with an acceptable reduction).

It may be hard to hear but it's also worth looking around to see what else is currently on the market. You have set your heart on this property but that doesn't mean that another one couldn't win it if given the chance. This will also give you some idea of how quickly the local market is moving and whether or not the property you are looking to buy really is, with a dispassionate eye, all that different to others that are on offer. Gauging this may help you to get a good idea of what position your sellers are in and how much time you might be able to buy to find a new buyer for your current property.

I hope you get the property that you want, but if you don't remember that it really is your buyer pulling out at the last minute that fundamentally caused you these problems. The government have to consider the wider social consequences of individual actions and they are duty-bound to put these first (not that they always do). If the situation were reversed and you were a priced out working family just wanting to buy your first home, not even thinking about being able to afford one nice enough that you would set your heart on it, then maybe you would see the changes differently.

I'm going go lower the price for a (hopefully) quick sale.

This is actually the second property I've had lined up since accepting the offer from the buyer who bailed on me. First one had restrictive covenants that weren't revealed until after the homebuyers report so a fair bit of cash wasted before I even spent a penny on moving forward with this other property.

[Neverwhere]

I'm going go lower the price for a (hopefully) quick sale.

This is actually the second property I've had lined up since accepting the offer from the buyer who bailed on me. First one had restrictive covenants that weren't revealed until after the homebuyers report so a fair bit of cash wasted before I even spent a penny on moving forward with this other property.

I'm sorry to hear that you were mucked about on the earlier property as well, I hope that you secure the quick sale that you need on your current one.

If the property you're looking to buy has been on the market for almost a year then it sounds like you have a very good chance that they will not find another buyer before you are in a postion to proceed with the purchase. They may also increasingly need to make the sale and might be willing to take a commensurate hit on price in order to make sure it happens (although perhaps the fact that their property has been on the market for so long is a sign of the opposite - that they don't need to sell and have been holding out for a specific price).

You might find that houseprices.io is a good resource for checking what is actually selling in your area and the price that it is selling at, to help gauge how competitively priced your property is relative to local transactions.

Good luck!