By Jane Mason.
On the 8th of July 2020, the Chancellor announced the first £500,000 of any property bought was exempt from Stamp Duty until 31st March 2021. This also included buy to let landlords – although they would still need to pay the additional 3% stamp duty level for second properties.
Talking to many homeowners, I know lots of you are bringing forward your home moving plans to take advantage of this tax cut. Also, many portfolio landlords are looking to save paying the tax by bringing their portfolio purchases forward. Yet how do you ensure you sell and buy your property whilst the tax cut applies – a saving of up to £15,000 of stamp duty on your next home?
As always, I like to look at a specific are for my analysis so I have concentrated on Burton-on-Trent for my figures. However, a similar trend is also apparent in most other areas.
Burton in Detail
The biggest issue whenever you are selling your Burton property is the properties that you are in competition with. Plenty of Burton homeowners have jumped onto the stamp duty holiday bandwagon since the announcement and there are 2% more properties for sale than there were during lockdown.
The number of properties for sale in Burton can split down into type…
• Detached homes up 12%
• Semi-detached homes down 3%
• Terraced / Town houses down 11%
• Apartments up 9%
So, now you know what you are up against, what do you need to know?
The most important factor is the time issue. It currently takes on average 17 to 19 weeks (see our blog on ‘How long will it take to sell my home‘) between a sale price being agreed and the keys being handed over, meaning you need to have found a buyer before the end of November or early December to enable you to complete the sale by the 31st March 2021.
That means you really need to have placed your property on the market by the end of September and early/mid-October at the very latest to take advantage of the stamp duty holiday. Don’t get me wrong though, you could put your property on the market after that date, yet the price you will be able to achieve for your property could be affected.
There are 923 properties on the market in Burton of which 442 have sales agreed on them.
Beware Tempting Asking Prices…
Talking of price, or more specifically the asking price. There is a window of opportunity for homeowners to take advantage of this stamp duty tax cut, yet don’t let local estate agents curry favour with you by tempting you with a high initial asking price to win the right to put their for sale board outside your home.
A Which report stated in 2017 that many estate agents routinely over inflated the asking prices of the properties they brought to market. One might ask why this is an issue for property sellers, as surely, they can just reduce their asking price at a later date?
The excellent report proved that those estate agents who, on the face of it appear to be doing you some kindness by endeavouring to get more for your home with a suggested higher asking price, the property often ended up selling for much less than similar properties that were realistically priced properties from day one and also, they ultimately took longer to sell!
This Which report compared the original asking price with final selling prices for 370,000 properties to ascertain how many estate agents had reduced the initial asking price of properties in order to sell them. Which found that 70,300 (19%) of all 370,000 properties sold had to be reduced by at least 5% in order to get the property sold, whilst the other 81% (299,700) had no or very minimal reductions to get them sold.
Of the 299,700 sold properties that weren’t reduced or reduced by less than 5%, the average initial asking price was £261,000, yet they eventually sold for an average sale price of £260,000.
For those 70,300 homes whose asking prices were reduced by over 5%, whilst the average listing price was £266,000, their eventual sale price was only £241,000, a loss of £20,000 each.
Even worse, those properties with the heavy price reductions (5% or more) took an average of nine weeks and one day longer to sell (when compared to the other properties with no or minimal reductions).
What that means is by over inflating your initial asking price of your home, it will cost homeowners an extra nine weeks to find a buyer and they will lose out on the final sale price by some considerable margin as well as losing out on the stamp duty holiday.
Tips to Speed Up a Sale
Assuming your asking is price is realistic, you aren’t out of the woods yet. Other things that will help you get the best price for your home in the best possible time and thus save you money with the stamp duty holiday are…
• Everyone searches on the portals for their next home. Photos are therefore very important (a picture speaks a thousand words). If the weather isn’t good on the day of the photoshoot, ask the agent to revisit when the sun is out and even tell them to hold off marketing the property until those pictures are perfect… as you only get one go at being ‘new to the market’, with all the excitement and interest that causes.
• Employ the services of a solicitor at the same time as instructing the estate agent. Bringing together the legal paperwork of the property you are selling. By doing so, you will save weeks between the sale agreed and completion. Also, solicitors will be really busy, juggling many property transactions at the same time in the next 200+ days. Anything you can do to get a head start on others can only help your cause.
• Kerb side appeal. Look at your property from across the road. Does the front door need painting? Could a tonne of gravel spruce up your driveway? Maybe adding some hanging baskets and planted pots will help to make a home stand out for the best reasons?
We have a great blog called ‘Preparing your home for a Quick Sale‘ which offers more detailed advice too.
If the asking price isn’t realistic, the chances are you end up losing many thousands of pounds and wasting everyone’s time.
If you would like to chat about selling your home, please do not hesitate to pick up the telephone and give me a call on 01332 300130