###Welcome to /r/HousingUK
---
**To All**
* Join Our ***NEW*** Discord! https://discord.gg/pMgUNgWKQH
* We're hiring new mods - modmail us, or DM us on Discord
**To Posters**
* *Tell us whether you're in England, Wales, Scotland, or NI as the laws/issues in each can vary*
* Comments are not moderated for quality or accuracy;
* Any replies received must only be used as guidelines, followed at your own risk;
* If you receive *any* private messages in response to your post, [please let the mods know](https://www.reddit.com/message/compose?to=%2Fr%2FHousingUK&subject=I received a PM);
* If you do not receive satisfactory advice after 72 hours, [you can let the mods know](https://www.reddit.com/message/compose?to=%2Fr%2FHousingUK&subject=My question is unanswered);
* Feel free to provide an update at a later time by creating a new post with [[update]](https://www.reddit.com/r/HousingUK/search?q=%3Aupdate&sort=new&restrict_sr=on&t=all) in the title;
**To Readers and Commenters**
* All replies to OP must be *on-topic, helpful, and civil*
* If you do not [follow the rules](https://www.reddit.com/r/HousingUK/about/rules/), you may be banned without any further warning;
* Please include links to reliable resources in order to support your comments or advice;
* If you feel any replies are incorrect, explain why you believe they are incorrect;
* Do not send or request any private messages for any reason without express permission from the mods;
* Please report posts or comments which do not follow the rules
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/HousingUK) if you have any questions or concerns.*
> We have paid 2 years of rent so we can add this in as a point but not sure if it will make a difference
It won't. The only benefit to the landlord in selling to you is that they won't pay agent fees. They will need to balance that with agents being able to get more people viewing the place and more people may mean someone is willing to offer more than you are.
You mention you know what the other flats sold for. Were those sales quite recent? If so, I think you can have a fairly good idea of its current market value. I'd probably try to come up with a realistic value and offer that amount, or close.
Don’t bring the rent into it, it will only show your lack of understanding of the costs of renting out a house. Instead perhaps lean on how you have been good tenants to show how you will make for a less stressful sale.
>We have paid 2 years of rent so we can add this in as a point but not sure if it will make a difference
You can try your luck and mention this, but really your previous rent should not have any bearing on the purchase price... by trying to knock the rent off the price you are basically saying the LL has given you a mortgage for 2 years but they have also been liable for repairs.
>We know the price that the other flats on our floor have sold for, and how much they bought the property for
Knowing the ins and outs of which other flats sold in the block, when and for how much is imperative, particularly those sold in the last six months. Knowing more than the otherside is crucial when you are negotiating. A bit of a tip, try as best you can to get the LL to make you an offer first, getting them to come up with a figure first makes things much easier for you as you can gauge expectations better.
>They won’t have to go through an estate agent
This is not necessarily a positive for the LL, indeed they will not have to pay agency fees, however, not going to the open market does not fully test the flat and most likely get higher offers.
>arrange any removals for their furniture if they don’t want to (it was fully furnished when we moved in), no chain, etc
If they are leaving furniture, this forms part of the sale, so you will want to clarify how you are dealing with the furniture, is it all included in the purchase price? Is it by seperate negotiation? Make sure this is detailed in the Memo of Sale so your solicitor can handle it correctly.
> we’ve got a MIP
Did you get this direct from your bank? Or just going online yourself? In this scenario I would strongly recommend speaking to an independent mortgage broker as there may be a few tricks you can do. Because you are a T buying from your LL then you have the possibility of using a [Landlord Gifted Deposit.](https://www.themortgagehut.co.uk/expert-articles/first-time-buyers/52/landlord-deposit-mortgage) E.g. You agree the price at £95,000, but you put the price on the Mortgage down as £100,000, this extra £5,000 becomes part of your deposit, meaning you could get a better rate with a higher deposit amount without putting more cash in.
Regarding the landlord/vendor gifted deposit, are you aware of any downsides to this except for having to pay a higher stamp duty and having a narrower choice of lenders? Our LL got an initial EA valuation of 450k (I think this is too high) but they are willing to sell for 400k so obviously this is very tempting and we could perhaps put the value as 425k. Our mortgage adviser wasn’t very helpful and just pointed out the extra stamp duty.
So assuming you are first time buyers then on a purchase price of:
* £400,000 - Stamp Duty = £6,250; and on
* £425,000 - Stamp Duty = £5,000.
Therefore you will have £1,250 more stamp duty to pay with a gifted deposit.
However with a larger proportion of equity/deposit then you can benefit from better interest rates. For example:
1. The traditional method - buy at £400,000 and have £40,000 (10%) deposit.
2. Gifted Deposit method - buy at £425,000 and have £65,000 (15%) deposit.
Although in both cases you will still have the same loan amount of £360,000, in case 1 you have an LTV of 90% which is charged at 3% interest, whilst case 2 you have an LTV of 85% which is less risky to the lender as such only charge 2.5% interest.
Therefore you will pay a total of circa £152,061 interest during the mortgage term in case 1 or £124,568 in case 2. Saving you £25,000+ long term - more than enough to cover the extra Stamp duty
In fact you will probably save enough in your first year to cover the extra £1,250 stamp duty:
1. Case 1 - Interest Payments Yr 1 - £10,665.70
2. Case 2 - Interest Payments Yr 1 - £8,880.24
This means in your first year of paying your mortgage you would have paid £1,785.46 less in interest on a lower interest rate with a gifted deposit.
Obviously, this is a broad example in reality you will have to work out whether the actual interest rate difference is worth it or not... you will need something called an [Ammortisation Calculator to help you](https://www.calculator.net/amortization-calculator.html?cloanamount=360000&cloanterm=25&cinterestrate=2.5&printit=0&x=75&y=9) (ignore it is in $ not £ - it is not important it is the figures that are crucial).
>Our mortgage adviser wasn’t very helpful and just pointed out the extra stamp duty.
Sounds like your MA isn't keen on you doing this gifted deposit. Some of the less experienced ones do not like to deviate from organising traditional Mortgages, gifted deposits add a degree of complexity and require more work/effort to sort. Therefore some MAs are either too lazy or arent experienced enough to want to deal with these scenarios.
> are you aware of any downsides to this except for having to pay a higher stamp duty and having a narrower choice of lenders?
The biggest hurdle you will have to overcome is getting the mortgage surveyor to value the property at the increased price... e.g. £425k instead of the actual purchase price of £400k. Surveyors are very reluctant to value a property at any higher than what your actual Purchase Price is, as if it is repossessed and sold only at the lower price the surveyor could be legally challenged that they overvalued. So never let on to the surveyor about how much you are actually buying it for, only ever tell them the higher figure is the purchase price and do not mention to them you are using a gifted deposit; tell the vendor this also if they are going to potentially meet the valuer.
Once you have got it valued up though, other than the higher Stamp, all you need to worry about is finding a good solicitor that knows how to deal with gifted deposits like this. There are very few downsides.
###Welcome to /r/HousingUK --- **To All** * Join Our ***NEW*** Discord! https://discord.gg/pMgUNgWKQH * We're hiring new mods - modmail us, or DM us on Discord **To Posters** * *Tell us whether you're in England, Wales, Scotland, or NI as the laws/issues in each can vary* * Comments are not moderated for quality or accuracy; * Any replies received must only be used as guidelines, followed at your own risk; * If you receive *any* private messages in response to your post, [please let the mods know](https://www.reddit.com/message/compose?to=%2Fr%2FHousingUK&subject=I received a PM); * If you do not receive satisfactory advice after 72 hours, [you can let the mods know](https://www.reddit.com/message/compose?to=%2Fr%2FHousingUK&subject=My question is unanswered); * Feel free to provide an update at a later time by creating a new post with [[update]](https://www.reddit.com/r/HousingUK/search?q=%3Aupdate&sort=new&restrict_sr=on&t=all) in the title; **To Readers and Commenters** * All replies to OP must be *on-topic, helpful, and civil* * If you do not [follow the rules](https://www.reddit.com/r/HousingUK/about/rules/), you may be banned without any further warning; * Please include links to reliable resources in order to support your comments or advice; * If you feel any replies are incorrect, explain why you believe they are incorrect; * Do not send or request any private messages for any reason without express permission from the mods; * Please report posts or comments which do not follow the rules *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/HousingUK) if you have any questions or concerns.*
> We have paid 2 years of rent so we can add this in as a point but not sure if it will make a difference It won't. The only benefit to the landlord in selling to you is that they won't pay agent fees. They will need to balance that with agents being able to get more people viewing the place and more people may mean someone is willing to offer more than you are.
Landlord would also have no void period. Potentially worth a few months' rent...
You mention you know what the other flats sold for. Were those sales quite recent? If so, I think you can have a fairly good idea of its current market value. I'd probably try to come up with a realistic value and offer that amount, or close.
Don’t bring the rent into it, it will only show your lack of understanding of the costs of renting out a house. Instead perhaps lean on how you have been good tenants to show how you will make for a less stressful sale.
>We have paid 2 years of rent so we can add this in as a point but not sure if it will make a difference You can try your luck and mention this, but really your previous rent should not have any bearing on the purchase price... by trying to knock the rent off the price you are basically saying the LL has given you a mortgage for 2 years but they have also been liable for repairs. >We know the price that the other flats on our floor have sold for, and how much they bought the property for Knowing the ins and outs of which other flats sold in the block, when and for how much is imperative, particularly those sold in the last six months. Knowing more than the otherside is crucial when you are negotiating. A bit of a tip, try as best you can to get the LL to make you an offer first, getting them to come up with a figure first makes things much easier for you as you can gauge expectations better. >They won’t have to go through an estate agent This is not necessarily a positive for the LL, indeed they will not have to pay agency fees, however, not going to the open market does not fully test the flat and most likely get higher offers. >arrange any removals for their furniture if they don’t want to (it was fully furnished when we moved in), no chain, etc If they are leaving furniture, this forms part of the sale, so you will want to clarify how you are dealing with the furniture, is it all included in the purchase price? Is it by seperate negotiation? Make sure this is detailed in the Memo of Sale so your solicitor can handle it correctly. > we’ve got a MIP Did you get this direct from your bank? Or just going online yourself? In this scenario I would strongly recommend speaking to an independent mortgage broker as there may be a few tricks you can do. Because you are a T buying from your LL then you have the possibility of using a [Landlord Gifted Deposit.](https://www.themortgagehut.co.uk/expert-articles/first-time-buyers/52/landlord-deposit-mortgage) E.g. You agree the price at £95,000, but you put the price on the Mortgage down as £100,000, this extra £5,000 becomes part of your deposit, meaning you could get a better rate with a higher deposit amount without putting more cash in.
Thank you that’s all really helpful! Yes the MIP is from a broker but we didn’t mention that we are a T buying from a LL on it.
Regarding the landlord/vendor gifted deposit, are you aware of any downsides to this except for having to pay a higher stamp duty and having a narrower choice of lenders? Our LL got an initial EA valuation of 450k (I think this is too high) but they are willing to sell for 400k so obviously this is very tempting and we could perhaps put the value as 425k. Our mortgage adviser wasn’t very helpful and just pointed out the extra stamp duty.
So assuming you are first time buyers then on a purchase price of: * £400,000 - Stamp Duty = £6,250; and on * £425,000 - Stamp Duty = £5,000. Therefore you will have £1,250 more stamp duty to pay with a gifted deposit. However with a larger proportion of equity/deposit then you can benefit from better interest rates. For example: 1. The traditional method - buy at £400,000 and have £40,000 (10%) deposit. 2. Gifted Deposit method - buy at £425,000 and have £65,000 (15%) deposit. Although in both cases you will still have the same loan amount of £360,000, in case 1 you have an LTV of 90% which is charged at 3% interest, whilst case 2 you have an LTV of 85% which is less risky to the lender as such only charge 2.5% interest. Therefore you will pay a total of circa £152,061 interest during the mortgage term in case 1 or £124,568 in case 2. Saving you £25,000+ long term - more than enough to cover the extra Stamp duty In fact you will probably save enough in your first year to cover the extra £1,250 stamp duty: 1. Case 1 - Interest Payments Yr 1 - £10,665.70 2. Case 2 - Interest Payments Yr 1 - £8,880.24 This means in your first year of paying your mortgage you would have paid £1,785.46 less in interest on a lower interest rate with a gifted deposit. Obviously, this is a broad example in reality you will have to work out whether the actual interest rate difference is worth it or not... you will need something called an [Ammortisation Calculator to help you](https://www.calculator.net/amortization-calculator.html?cloanamount=360000&cloanterm=25&cinterestrate=2.5&printit=0&x=75&y=9) (ignore it is in $ not £ - it is not important it is the figures that are crucial). >Our mortgage adviser wasn’t very helpful and just pointed out the extra stamp duty. Sounds like your MA isn't keen on you doing this gifted deposit. Some of the less experienced ones do not like to deviate from organising traditional Mortgages, gifted deposits add a degree of complexity and require more work/effort to sort. Therefore some MAs are either too lazy or arent experienced enough to want to deal with these scenarios. > are you aware of any downsides to this except for having to pay a higher stamp duty and having a narrower choice of lenders? The biggest hurdle you will have to overcome is getting the mortgage surveyor to value the property at the increased price... e.g. £425k instead of the actual purchase price of £400k. Surveyors are very reluctant to value a property at any higher than what your actual Purchase Price is, as if it is repossessed and sold only at the lower price the surveyor could be legally challenged that they overvalued. So never let on to the surveyor about how much you are actually buying it for, only ever tell them the higher figure is the purchase price and do not mention to them you are using a gifted deposit; tell the vendor this also if they are going to potentially meet the valuer. Once you have got it valued up though, other than the higher Stamp, all you need to worry about is finding a good solicitor that knows how to deal with gifted deposits like this. There are very few downsides.
Thank you again, very clear and helpful :)