Originally posted by Power Mortgages Ltd
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Hi Lisa,
That is more to do with the stamp duty avoidance schemes where some Solicitors found loop holes in the stamp duty tax laws enabling clients to get away with paying stamp duty. Normally the firms who do this would charge a fee which means you end up paying a fraction of the cost of the stamp duty but as the article points out, the loop hole has closed down now.
This isn't related to stamp duty incentives offered by the builders or developers of new build properties though. In this instance the builder pays the stamp duty for the client.
It is a clever tactic employed by builders and developers to keep the property purchase price high which helps them to then sell the next property at a high price maybe not offering the same incentive to the next client and thus increasing their profitability.
Some lenders would argue if you are buying a property at £100,000 but the builder is giving you £5,000 of incetives then technically you are only paying £95,000 for the property and that is all it is worth but to those lenders who allow builder/developer gifts then the mortgage is agreed with the value of the property stated at £100,000. The incentives have to be disclosed as part of the CML requirements but it adds weight to the builders/developers ability to sell the next property for £100,000 if they can show that Mr & Mrs Smith next door paid £100,000 for the identical home they are trying to sell next. What they rarely will disclose to the new buyer is the incentives they paid to Mr & Mrs Smith in the hope that the new buyer wont ask for as much.
The stamp duty loophole was an interesting one though. I would never advocate it myself personally but one or two of my clients did utilise the scheme (arranged by themselves and against my advice). To my knowledge they have not had to pay the stamp duty but I dont know if HMRC have the ability to retrospectively ask for the stamp duty at a later date. The firms facilitating the loophole gave all kinds of promises that they could not but I was not overly convinced.
That is more to do with the stamp duty avoidance schemes where some Solicitors found loop holes in the stamp duty tax laws enabling clients to get away with paying stamp duty. Normally the firms who do this would charge a fee which means you end up paying a fraction of the cost of the stamp duty but as the article points out, the loop hole has closed down now.
This isn't related to stamp duty incentives offered by the builders or developers of new build properties though. In this instance the builder pays the stamp duty for the client.
It is a clever tactic employed by builders and developers to keep the property purchase price high which helps them to then sell the next property at a high price maybe not offering the same incentive to the next client and thus increasing their profitability.
Some lenders would argue if you are buying a property at £100,000 but the builder is giving you £5,000 of incetives then technically you are only paying £95,000 for the property and that is all it is worth but to those lenders who allow builder/developer gifts then the mortgage is agreed with the value of the property stated at £100,000. The incentives have to be disclosed as part of the CML requirements but it adds weight to the builders/developers ability to sell the next property for £100,000 if they can show that Mr & Mrs Smith next door paid £100,000 for the identical home they are trying to sell next. What they rarely will disclose to the new buyer is the incentives they paid to Mr & Mrs Smith in the hope that the new buyer wont ask for as much.
The stamp duty loophole was an interesting one though. I would never advocate it myself personally but one or two of my clients did utilise the scheme (arranged by themselves and against my advice). To my knowledge they have not had to pay the stamp duty but I dont know if HMRC have the ability to retrospectively ask for the stamp duty at a later date. The firms facilitating the loophole gave all kinds of promises that they could not but I was not overly convinced.
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