Legal costs

Moggaman

Hi. I am buying a small piece of land of my neighbour for 10k. 600sq metres.
I asked my solicitor what is the cost to transfer the land from his name to mine. Quote is 1900 most of which is made up on stamp, legal fee of 500 and land registration fee. So that’s the cost to me.
Is there any cost on the other side , ie the seller, or is it just my solicitor that handles the whole thing for 1900.
I approached my neighbour about selling so he won’t be keen to incurr solicitors costs.
Also, if I pay him , and we sign an agreement, can’t I leave it like that for a while ..ie I am legally the owner but just not registered as such
Thanks

Peregrinus

Moggaman wrote: »

Hi. I am buying a small piece of land of my neighbour for 10k. 600sq metres.
I asked my solicitor what is the cost to transfer the land from his name to mine. Quote is 1900 most of which is made up on stamp, legal fee of 500 and land registration fee. So that’s the cost to me.
Is there any cost on the other side , ie the seller, or is it just my solicitor that handles the whole thing for 1900.
I approached my neighbour about selling so he won’t be keen to incurr solicitors costs.

He will need a lawyer and will incur costs. The costs will be less than yours since he won't bear stamp duty, registration fees, etc.

Moggaman wrote: »

Also, if I pay him , and we sign an agreement, can’t I leave it like that for a while ..ie I am legally the owner but just not registered as such
Thanks

This is not safe. As far as the rest of the world is concerned, he still owns the land. You may think it unlikely that he would, e.g., dishonestly or mistakenly sell the land a second time to someone else, or mortgage it, and hopefully it is. But there still remains the possibility that the land would be pursued by his creditors, or might be caught up in a family row, marriage breakdown, inheritance dispute, that kind of thing.

More to the point, why would you do this? You're going to have to register the transfer as some point, and the costs of doing this are not going to go down by delaying the registration - they are more likely to go up. So what is the advantage to you?

Glass fused light

I can't see any solicitor being happy to agree not to register the land just to save on the reg fees. For you that is the only saving. The stamp is payable to Revenue on the closing of the contract, and imo the legal work charge would remain the same or go up.
The solicitor would end up with an open file of work that has no end date, and as Peregrinus pointed out they have the additional risk of becoming involved with a ownership dispute in the future. That's a open ended risk for them to manage on what should be a simple transaction.

Dolbhad

Your solicitor I doubt would act unless they could register the transfer. Also registration gives you priority- it’s all well and good having a transfer to you but land registry tends to work on first come first serve basis so your at risk if you didn’t register it and he did something else. Or if he died and your dealing with the family trying to assert your claim.

Also same solicitor can’t act for both of you so that’s two sets of legal costs involved. Also in budget now stamp duty on land was increased to 7.5% effective immediately so that is another cost

Moggaman

So in the solicitors quote there is no mention of assessing the cost of the land for stamp duty purposes. If i paid 5k cash and called the cost of the piece of land 5k, would that not reduce my stamp duty burden ....not saying I would do it but if I was buying a piece of land worth 100,000, who dictates the price of value of the land I am paying stamp duty on ?.

Moggaman

Why is the Farmer paying 3300 tax?..Capital Gains?..

i have done some reading and am a bit perplexed..
My situation is a bit different.... i just got planning for a house on 1/2 acre....the make up of this 1/2 acre is 2/3s (of the 1/2 acre) my fathers side garden and the 1/3 the land i am buying behind it from my neighbour.
So, in relation to my fathers piece, I read that stamp duty is incurred on land from a parent regardless of whether its a gift or you pay market value for it. Is there is a clause saying that if its the curtilage of a house which is under an acre, and is for the purposes of building a dwelling, that the Stamp is treated as Residential at 1% or maybe 2%.
In relation the small bit from my neighbour, as this piece will be bought with Planning Permission secured, if I build within 30 months, can I claim back 4% bringing it back to 2%.
Thanks

L1011

Moggaman wrote: »

So in the solicitors quote there is no mention of assessing the cost of the land for stamp duty purposes. If i paid 5k cash and called the cost of the piece of land 5k, would that not reduce my stamp duty burden ....not saying I would do it but if I was buying a piece of land worth 100,000, who dictates the price of value of the land I am paying stamp duty on ?.

Nobody can give advice here that could lead to a misdeclaration of liabilities

Victor

You need professional advice.

Moggaman wrote: »

So in the solicitors quote there is no mention of assessing the cost of the land for stamp duty purposes. If i paid 5k cash and called the cost of the piece of land 5k, would that not reduce my stamp duty burden ....not saying I would do it but if I was buying a piece of land worth 100,000, who dictates the price of value of the land I am paying stamp duty on ?.

Revenue know how much land costs and may apply a different value to yours.

Vendor may not be happy with the lower price in the contract.

Moggaman wrote: »

Why is the Farmer paying 3300 tax?..Capital Gains?..

They are paying tax on the profit they are making on the sale of the land. Note that it is their cost, not yours.

Moggaman wrote: »

So, in relation to my fathers piece, I read that stamp duty is incurred on land from a parent regardless of whether its a gift or you pay market value for it. Is there is a clause saying that if its the curtilage of a house which is under an acre, and is for the purposes of building a dwelling, that the Stamp is treated as Residential at 1% or maybe 2%.

There are different categories. You may be dealing with development land, not a residential property.

Moggaman wrote: »

In relation the small bit from my neighbour, as this piece will be bought with Planning Permission secured, if I build within 30 months, can I claim back 4% bringing it back to 2%.

You need to do this very carefully - you need to "buy subject to planning permission". This means the price is fixed before the planning permission and that the vendor can't back out if you get planning permission.

You need professional advice.

BrokenArrows

Victor wrote: »

You need professional advice.

Revenue know how much land costs and may apply a different value to yours.

Vendor may not be happy with the lower price in the contract.


They are paying tax on the profit they are making on the sale of the land. Note that it is their cost, not yours.

There are different categories. You may be dealing with development land, not a residential property.

You need to do this very carefully - you need to "buy subject to planning permission". This means the price is fixed before the planning permission and that the vendor can't back out if you get planning permission.

You need professional advice.

Exactly this. Land with planning permission is much more valuable than without it

Dolbhad

Stamp duty is payable on the value of the land - revenue don’t care if you buy it for less value. A valuation will need to be carried out by auctioneer. Solicitor will request this as they submit the stamp duty return. Auctioneer will know it’s for revenue and will be upfront on the value.

As others have mentioned, both of you need to get professional advice from solicitors and potentially farmer may need to from a tax advisor. A quote isn’t enough. Once engaged, your solicitor and his solicitor will go through the details in full.

Stamp duty on land is now 7.5% on the value of land. There was a clawback when it was 6% to claim back 4% if you built on it within a certain time frame. Not sure what it is now since the increase. Presume the same? But 7.5% of value of land is upfront cost. The whole reduction when buying off a parent is all gone I think unless your dealing with land to farm (not build on). That was called consanguinity relief.

Non residential land is 7.5%. Residential land is 1% but needs to be a dwelling on it up to one acre. Everything else is non residential for revenue. Govt in budget called it commercial stamp duty but that’s not what revenue see it. It’s either residential or non residential.

Moggaman

Dolbhad wrote: »

Stamp duty is payable on the value of the land - revenue don’t care if you buy it for less value. A valuation will need to be carried out by auctioneer. Solicitor will request this as they submit the stamp duty return. Auctioneer will know it’s for revenue and will be upfront on the value.

As others have mentioned, both of you need to get professional advice from solicitors and potentially farmer may need to from a tax advisor. A quote isn’t enough. Once engaged, your solicitor and his solicitor will go through the details in full.

Stamp duty on land is now 7.5% on the value of land. There was a clawback when it was 6% to claim back 4% if you built on it within a certain time frame. Not sure what it is now since the increase. Presume the same? But 7.5% of value of land is upfront cost. The whole reduction when buying off a parent is all gone I think unless your dealing with land to farm (not build on). That was called consanguinity relief.

Non residential land is 7.5%. Residential land is 1% but needs to be a dwelling on it up to one acre. Everything else is non residential for revenue. Govt in budget called it commercial stamp duty but that’s not what revenue see it. It’s either residential or non residential.

The land I am buying from my neighbor is zoned residential... that makes it residential I presume?

Victor

Moggaman wrote: »

The land I am buying from my neighbor is zoned residential... that makes it residential I presume?

Irrelevant, as I understand it. For residential stamp duty to apply, it would need a residence already. You are likely dealing with development land.

Dolbhad

Moggaman wrote: »

The land I am buying from my neighbor is zoned residential... that makes it residential I presume?

As Victor said, it doesn't matter how it’s zoned. To get 1% it has to already have a house on it. If not, it’s 7.5%.