Vendor Gifted Deposit Transfer Figure?

Question

If buying a property for £100,000 -to include a 10% vendor gifted deposit (so borrowing 90,000), what is the transfer figure for exchange of contracts?

My solicitor says 100,000 for tax and land registry purposes

Sellers solicitors says it has to be the net figure... I understand this to be incorrect as the property is valued at 100k with the mortgage lender, and they are lending 90% loan to value, so it will go through as being sold for 100k with land registry..

the sellers solicitors seems to think this is wrong..not sure if they are just suspecting mortgage fraud due to the size of "deposit"... one of her points being her clients liability for capital gains...well to my knowledge you pay capital gains on profit, not on gross income, the 10% seller gifted deposit can be put down as an expense against the figure of 100,000

Can anyone shed any light on the matter please?

Answer 1

When exchanging contracts, you normally pay 10% deposit - which is based on the price of the house. In your case, you'd have to put down 10%.

The fact that the vendor is placing 10% towards the purchase doesn't matter.

When the transaction completes, it will show up on the land registry as £100,000. I know this because I recently purchased a new build property where the developers "paid" 5%.

The vendor gifted deposit scheme is normally used to help people get mortgages as it makes the equity look bigger.

Answer 2

You Solicitor is right and should complete the Land registry etc. with the correct figures.

Do not get involved further with the sellers Solicitor = tell them they can do what they like, it's of no concern to you if they get done for Tax Evasion ..