Stamp duty deadline missed due to vendor dragging feet

by Readers Question

15:59 PM, 31st March 2016
About 5 years ago

Stamp duty deadline missed due to vendor dragging feet

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Stamp duty deadline missed due to vendor dragging feet

I had an offer or £295000 accepted on a 2 bed flat in North London on 12th January 2016. I thought I would have plenty of time to complete by the 31st March stamp duty deadline!late

However due to the incompetence of the estate agents in house broker and the vendor who took weeks/months to supply required information to his solicitors and further weeks to allow access to mortgage valuers there by delaying my mortgage offer I have now missed the deadline and face a £8,850.00 increase in SDLT.

On 13th January I had a meeting with the broker and he suggested I apply for an 80% LTV mortgage. We went through all the usual details. I gave him bank statements. ID documents and 3 year’s accounts (I’m self employed) he did a credit check and I also explained that my deposit was from an inheritance from my Mother who passed away in 2014. He filled out the forms and submitted them to the lender. I then waited for the survey to be arranged and for an offer. I contacted that agents and Broker daily to push for a survey appointment and was consistently given excuses as to why nothing was being done. The vendor who has at tenant in the property was not returning calls they could not get access to the property for the valuation survey. The valuation was finally done on 9th Feb. (Almost 1 month wasted) The Broker then told me that the underwriters were questioning my deposit and needed more proof. I supplied them with My mothers final Estate accounts certified by the probate solicitors which showed the amounts I had been received in her will… but there still seemed to be a problem and no offer had been made. Eventually I contacted the lenders directly and discovered that the problem was that my broker had mistakenly indicated in the application that my funds were from “Savings” and should have been declared as “Inheritance” This had aroused the suspicions of the underwriter and delayed the offer. They finally made an offer 29th Feb but for only 75% LTV and at the same rate as the 80% deal, not a particularly good deal. I discussed this with the broker and he suggested I apply for a new 80% loan with another lender and claimed he could get an off in 5 days!! Of course I was skeptical but took his advice and he submitted a new application on 4th March. To cut a long story short the whole sorry process repeated itself the vendor again delayed the survey which was eventually done on 24th March I also contacted the lenders and again discovered that the broker had made mistakes on the application. He had initially given the wrong property address and stated that I am “Employed” rather than “Self Employed”. Mistakes that he later corrected. I’m now waiting for an offer.

In addition to this the vendor has been extremely slow in supplying information. The leasehold pack requested by my solicitors took 2 months to come back because the vendor delayed payment of £400.00 to the Freeholders for this information.

I’m now in the position where I don’t yet have a mortgage offer and will struggle financially to meet the additional SDLT and so am questioning weather to go ahead with the purchase.

About a month ago I had a conversation with the Estate agent and explained by way of trying to move things forward that if we were unable to complete by the end of March I’m concerned that I might have to pull out of the deal. He advised me that we should carry on and try to beat the deadline he also said that if I did pull out then it would not be a problem as the market is moving very quickly and the property would probably be marketed at a higher price if it did go back on sale. I’m now suspicious that the vendor may have dragged his feet because he saw an opportunity to get a better offer at a later date.

Brokers fee and Legal fee are only payable on completion but I have already paid around £350.00 for searches and I think there will be some other expenses. Do I have a chance of claiming from the vendor if I decide not to go ahead?

This is my first foray into Buy To Let and I would welcome any advice that members can give me. Should I make a lower offer? Can I claim compensation for expenses and time wasted? Who could I go to make a formal complaint?

Matt


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Comments

Steven Burman

11:16 AM, 1st April 2016
About 5 years ago

Matt

Gaurav's advice is spot on. Renegotiate when you are ready to exchange and be prepared to walk away if necessary.

The vendor only has to give 24 hours notice to the tenant to gain access to the property so I would not accept the excuse that arranging access was difficult.

Your advisor will be answerable for his mistakes but you will only be compensated for money you have actually spent.

Good luck.

James Forbes

19:32 PM, 1st April 2016
About 5 years ago

Reply to the comment left by "Mandy Thomson" at "01/04/2016 - 09:25":

Hi Mandy.
It's funny that you should mention the tenant as I now have my suspicions as to weather the woman on the tenancy agreement actually lives at the property. I have viewed the flat twice and was told by the vendor at the first viewing that the tenant lives there with two young children. However there is no evidence of kids in the place. No toys, clothes, toothbrushes, games console, drawings etc...nothing, in fact I'm 100% sure that no child lives there. The two bedrooms are occupied there is food in the fridge and the place is generally clean and tidy.

I think the current landlord is aware of the situation and that what ever the arrangement it has been going on for years! The current AST is to the end of June. My plan was to keep the current tenant and review the situation at the end of the AST. My research suggests that the current rent is at least 10% below market value so a rent increase is due.

This all explains why access has been difficult.

more "Alarm Bells"? but in my view it's a decent property at a good price!

James Forbes

19:47 PM, 1st April 2016
About 5 years ago

Reply to the comment left by "Steven Burman" at "01/04/2016 - 11:16":

Hi Steven.
Thanks for your comment and I agree with both you and Gurav
You will note in my reply to Mandy that the situation with the tenant might be a bit complicated.
I am ready to "walk away" I things don't add up.

Mandy Thomson

22:21 PM, 1st April 2016
About 5 years ago

Reply to the comment left by "James Forbes" at "01/04/2016 - 19:32":

If the property isn't the tenant's main home, and this can be proved, then the tenancy would be automatically demoted in law from an assured shorthold to an excluded tenancy (that is to say, the tenant isn't protected under the 1977 Protection From Eviction Act).

An excluded tenant must be given a month's notice to quit, and although the landlord must still seek a possession order if the tenant won't move out, the tenant would only be able to contest the notice if it was factually incorrect or the tenancy agreement couldn't be proved, though in this instance they might try to argue that the AST still holds, so you would need to prove it wasn't the tenant's main home.

I agree it's a bit odd that the vendor thinks the tenant has young children, when there's no evidence of such. However, many landlords leave it entirely to an agent to plonk.... sorry PLACE(!) any old tenant in their property and as long as they don't hear from anyone and the rent keeps coming, they don't care.

If you are going to buy this place with the tenant in situ, reference the tenant and get rent guarantee insurance. This may mean drawing up a new rent agreement, instead of simply assigning the existing one, but from what you've said about changing the rent this may be the best course in any case.

Mandy Thomson

22:31 PM, 1st April 2016
About 5 years ago

Reply to the comment left by "Mandy Thomson" at "01/04/2016 - 22:21":

Sorry, it's late - that should read "tenancy agreement" and not "rent agreement"!!

mark andrews

8:08 AM, 2nd April 2016
About 5 years ago

Reply to the comment left by "James Forbes" at "01/04/2016 - 19:32":

Firstly, gaining access to a property is simple. 24 hours notice is all that is required. So let me get this straight, you've walked around this person's home and even felt it necessary to snoop through their fridge? And the moment the AST is due for renewal you will consider wether to evict or not, and raise the rents by 10%?

Speaking as a landlord myself, this is exactly the type of attitude that gives us a bad name and causes landlords to be hated by the public. It is also part of the reason why we are now such an easy target for the likes of GO.

I have to ask the question, why are you choosing now to get into the landlord business with so much uncertainty in the air? Have you really thought this through or were you simply rushing to beat SDLT?

James Forbes

10:21 AM, 2nd April 2016
About 5 years ago

Reply to the comment left by "mark andrews" at "02/04/2016 - 08:08":

Hi Mark

I first viewed the property with the owner and agent present. The owner told me the tenant lived in the flat with her two children. I remarked how tidy the place was, as I could see no sign of children’s things. He said that they often stayed with her mother near by.
The kitchen fixtures are included in the sale so I looked inside the fridge with the owner’s permission to see what condition it is in.

I have been advised that the rent is due for review. Prior to renewal of the AST I would notify the tenant that I intend to increase the rent. However if I discovered for example that she is claiming benefits and subletting for a profit while living elsewhere then I would obviously have to consider the position. What would you do if that were the situation?

I have wanted to invest in property for many years and now I’m fortunate enough to have a reasonable deposit thanks to an inheritance. By coincidence I started my search in earnest on the very date of the autumn budget statement when the SDLT hike was announced.

Yes I have thought things through. I have thought of very little else for the last 6 months. I even joined this forum to gain further insight into the property business!
I read very interesting and insightful articles on Property188 site every day.

In his article http://www.property118.com/the-roots-of-my-property-investment-strategy/ Mark Alexander explains why he believes there is “never a bad time to buy”.

I think you may have jumped to conclusions about me but thanks for your comments I will certainly take them on board

H B

11:06 AM, 30th April 2016
About 5 years ago

This is a tricky situation for you. My suggestion would be to go back to the vendor and offer the same price less the 3% additional stamp duty i.e. £9,000 lower.

My reasoning is thus:

It is being sold with a tenant and presumably being marketed at BTL investors, all of whom would now have to pay an additional 3% stamp duty. Potential owner occupier purchasers are likely to be deterred by the presence of a tenant.

In addition, the year to March used up a lot of the BTL activity for the year, or at least the first half. I would expect there to be far fewer buyers out there than usual for quite some time.

With fewer buyers out there, you might well get lucky.

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