Buy Now, Quick, ......... Or Wait ?
18 Feb 2016
After 31st March this year there will be a 3% extra stamp duty levy on all second homes. In real terms if you are completing on a property before 31st March which is costing £125,000 then the stamp duty will be zero.
If you complete after 31st March then the stamp duty will be £3750.00. Quite a big difference.
What will this mean ? What will happen before this date, or after this date in regard to the property market ?
Suttons City Living has been, and still is, experiencing a rush for property, although this is a mix of people buying their first home and rental investors purchasing their second or more property. Some specialist buy to let lenders have already closed applications for those people looking to complete before the deadline, other lenders are now not promising anything in regard to completion dates etc.
What is the best way to purchase before the deadline and avoid the extra tax. The most important thing is to use a good mortgage broker, preferably one from one of the larger broker firms. The reason for doing this is that brokers will know which lenders are processing applications the quickest, and which ones are dragging their heels.
Why use a big firm of brokers ? Because they are the banks biggest customers, the banks will look after them the best.
The next most important thing is to do is choose your solicitor wisely. The service that you get from solicitors varies massively and the phrase, “you get what you pay for” counts. Check review sites, have a long chat with them about timescales etc, Suttons City Living can recommend solicitors who have always been very pro-active with progressing sales quickly. And if you can afford it, then skip the mortgage and buy in cash outright as this will be much quicker, with not as many boxes to tick to satisfy the mortgage lender.
Another good tip is to always ask your solicitor if everything that is outstanding is absolutely necessary, sometimes the solicitors may be waiting on a question such as who the current electricity provider is ……………… realistically would you prefer to wait for this knowledge and pay the stamp duty tax, or just find out when you move in ?
But should you be buying before the deadline anyway ?
If this is your first property then it may be good advice to wait until after the 31st March, after this date, anyone who is buying a place as a second property will be at a disadvantage to you, as they will have to pay the extra stamp duty, in real terms making the property more expensive for them.
This may be true, but it may also be that anyone who was thinking of selling has already got their property onto the market after hearing about the extra tax in the last budget. This in turn could lead to a dramatic shortage of stock after 31st March, dictating that if demand doesn’t slow dramatically, and supply does, prices with inevitably rise further.
Realistically, nobody knows and everyone is just making educated guesses, my advice would remain as it always has done.
If you like a property, offer what you would be very happy to pay. If this is accepted, then you have a deal and you are very happy.
If your offer is rejected, offer what you would be happy to pay. If this is accepted then you have a deal and you are happy.
If this is rejected, then walk away and offer what you would be happy to pay for something else.
Repeat, until the deal happens.
Sales and Lettings Manager