If you last bought a property a few years ago, and are planning to sell up and move house, there are a few changes to the law that are worth being aware of. Depending on how long ago you last bought, you might also be surprised about changes to the overall climate of conveyancing: and forewarned is forearmed.
Stamp Duty rates have been changed many times in recent years by successive administrations. Changes introduced in 2014 also affected the way the tax is paid, while changes in 2016 meant second-home owners pay more.
Stamp Duty Rates Spring 2017
Under £125,000 0%
Stamp Duty is now payable only on the portion of the property’s value which falls into each of the brackets above. This means on a £750,000 house purchase there would be no tax on the first £125,000, then 2% to pay on the next £125,000 and 5% to pay on the remaining £500,000.
Stamp Duty and Second Homes
Since April 2016 buyers of second homes and buy-to-let properties pay an extra 3% in Stamp Duty on top of current rates for each band, on properties bought for £40,000 or more – this also applies if you buy a new house before selling your main residence.
Home Information Packs and the EPC
Home Information Packs (HIPs) were originally introduced in April 2009 but quickly scrapped by the coalition Government in May 2010 in an effort to increase transaction numbers.
Although sellers no longer need to arrange a HIP, the Energy Performance Certificate (EPC) element of the pack is still required, as part of EU law. The EPC lasts for ten years, and is provided by an accredited assessor: these are easily found online (link www.epcregister.com/).
Securing a mortgage
New rules on mortgages from the Financial Conduct Authority (FCA) officially came into play in 2014, and particular emphasis was put on stress-testing buyers for a rise in interest rates, and building in stronger affordability checks. What this means in practice is that you may need to provide more information than in the past and lenders may scrutinize applications more closely. In some cases this can slow the application process down compared to years gone by, but an experience mortgage advisor will be able to assist you.
If this isn’t your first purchase you’re in luck because a record of on-time mortgage payments is reassuring to lenders, but you will still find a rigorous process of hoops to jump through.
Make sure you have your finances in order, gathering a detailed paper trail on all your incomes and outgoings, and find a reliable, experienced mortgage advisor. Remember, your property will be security for the mortgage.
Across the capital sales are taking longer to complete and transaction levels are considerably down compared with the pre-2007/8 market. Chains, in particular, can be extremely fragile. In this climate it’s absolutely key for sellers to choose an estate agent who will do a good job of pricing the property correctly – the right price is absolutely crucial to getting a sale.
Both buyers and sellers also need to make sure they have a first-rate solicitor in place - the right estate agent and a great solicitor often mean the difference between a successful and an unsuccessful sale in today’s market.