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Developer refuses to pass on £10k stamp duty saving to buyers

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  • 14/07/2020
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Developer refuses to pass on £10k stamp duty saving to buyers
Brokers are reporting cases where builders are pocketing savings from the stamp duty holiday rather than passing it on to buyers.

 

However, lenders say they expect negotiations over how the cash savings should be distributed.

A number of new-build developers have long offered to pay stamp duty as part of incentives to attract home hunters.

But last week the chancellor cut all stamp duty on first home purchases up to £500,000 from now until March 2021.

Many buyers who had stamp duty paid as part of their deal are now expected to haggle over prices.

In a note to brokers this week, Santander told brokers it expects borrowers to try to negotiate stamp duty savings from developers as a cash payment instead.

As a result, the lender will accept cash incentives, in lieu of stamp duty, on applications submitted before 9 July, when the change was made.

 

Developer not offering discount

However, not all developers are wiling to pass on the saving.

Chris Hall, mortgage and protection adviser at Mortgage Guardian, has a client where the developer is refusing to lower the purchase price – despite having previously agreed to pay the stamp duty.

It means the builder, who Hall declined to name, stands to gain more than £10,000 from the change.

Hall’s clients are still having to push an extra £5,000 into the mortgage, which the lender required on account of the developer paying the stamp duty.

He told Mortgage Solutions: “Everyone’s perception is the stamp duty change benefits the clients.

“The clients are not benefiting; it’s the developers benefitting.”

He said that it appeared to be a case of “capitalism showing it’s ugly side” but added that even if developers gained, it was an overall boost to the housing market.

Not all developers pocket savings

However, Alastair McKee, managing director at One 77 Mortgages, said most builders appeared to be open to negotiations.

He said: “It’s a bit early but we’ve definitely seen some developers offering discounts or cash incentives.

“Most at the moment seem to be using the stamp duty saving as a contribution towards deposit if it works with the lender and any government-backed schemes, such as Help to Buy.

“It’s a big saving to most people so is great news and hopefully it will prop up the market and boost confidence in the market.”

In some cases, developers are offering different incentives to prospective buyers.

For example, housebuilder Hill is now offering on its Echo One development in Harrow free parking at the development instead of stamp duty paid.

 

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