I am currently house-hunting and have just found a place I want to make an offer on.
I am on a relatively tight budget, so I am keen to take advantage of the extended stamp duty holiday and complete before the end of June.
The property is worth £575,000, so I would be saving £15,000 in taxes. Given how much house prices have risen in the past year, I feel I would be over-paying for this home if I did not get the £15,000 discount.
Would it be acceptable, or advisable, for me to present two offers: one if the sale completes before 30 June, and one taking into account the stamp duty bill if not? And is this likely to put the vendor off selling me the house? Via email
This person has found a home they want to buy: but should they make two separate offers?
Helen Crane of This is Money replies: Understandably, you have been incentivised to move house by the prospect of saving thousands of pounds in taxes.
The Government introduced the stamp duty holiday in summer 2020, as a way to kick-start the property market after it was forced to close down for two months due to the first national lockdown.
It was initially set to end on 31 March, but has now been extended, and there are two phases to this.
From now until 30 June, the holiday will operate as it had done previously, with the portion of any property sale under £500,000 being exempt. Under this regime, you would pay £3,750 in stamp duty.
From 1 July until 30 September, that exemption band will be reduced to £250,000.
Under these rules, you would need to pay £16,250 in stamp duty. After that, stamp duty will return to normal and you would be eligible to pay £18,750.
Lots of people have had the same idea as you and are looking to move before 30 June to make the maximum saving. There are two potential issues for you here.
The first is that, with so many people looking to move, professionals involved in the home buying process are operating at maximum capacity.
Getting a mortgage offer or property survey, or going through the conveyancing process, is taking much longer than it did before the pandemic – in some cases up to 15 weeks between making an offer and completing.
This means that completing before the stamp duty holiday deadline is by no means guaranteed for you, and you are wise to be considering your options if that does not happen.
However, huge demand from home buyers has also created a sellers’ market. Vendors are being flooded with offers in some cases, and are in a position to pick and choose who they sell to. Bidding wars are not uncommon.
This means you will want to present yourself in the best possible light to the seller of your potential new home.
So what is the best plan of action? We asked three estate agents for their advice.
Baljit Arora, managing director of Orlando Reid, replies: I would not advise you to make two offers on a property, as this may raise concerns as to your motivation for purchasing the property.
Estate agent Baljit Arora does not advise that the buyer bases their offer on meeting the stamp duty holiday deadline
In my experience, vendors tend to place greater importance on a buyers’ honesty and commitment rather than the ability to pay a few thousand pounds extra.
This holds true particularly for those vendors in a chain, as a buyer who is likely to give them a stable sale would be the optimum choice.
My advice would be to make an offer that you feel comfortable with; I would not advise basing your offer on beating the stamp duty deadline. If you do beat the deadline, this is of course a bonus, and you will have extra money for your home improvements.
Sadly, the Covid-19 pandemic has caused unprecedented delays in the sales process.
The average ‘agreed sale’ to completion date has increased from 11 to 15 weeks. If a sale fails to go through before the first stamp duty deadline, the vendor should not be penalised for this.
Marc Goldberg, sales director at Marsh & Parsons, replies: Buyers are absolutely able to make an offer subject to being able to meet the stamp duty holiday deadline – but likewise, a vendor is able to respond individually to both scenarios.
If the buyer is thinking that they will need to reduce their offer if the deadline is missed, then it is better to be transparent about this at the outset.
It is, however, likely that a vendor will have a bottom line in mind, and will be reluctant to accept a lower amount due to the deadline being missed.
The vendor will not assume that the value of their property will reduce to the extent of the stamp duty savings of the buyer.
What this situation will do is create urgency around the speed of the proposed transaction and the need for both buyer and seller to act swiftly enabling the necessary timeliness of exchange and completion.
In these cases it becomes even more important for buyers and sellers to have efficient solicitors and mortgage providers with all parties conscious and bought in to the deadlines required to expedite a sale.
Having a good relationship with the vendor can be important when buying a home
Jeremy Leaf, north London estate agent and a former RICS residential chairman, replies: We are seeing a bit of this happening – we saw it before the first stamp duty deadline was looming at the beginning of the year, and are seeing more now as the end of June deadline comes closer.
Sometimes it is not voiced as such, but buyers have in their heads that if they don’t make the deadline, they intend to reduce their offer because they will be that much worse off.
We are probably not quite near enough yet to the withdrawal of the concession for too many people to think about it, but it will certainly be in the minds of many first-time buyers in particular as that deadline nears.
Previously there were attempts to share the saving fairly equally between buyer and seller and that is likely to happen again this time – although the reality is that most buyers don’t want to miss out on the home they have chosen by being awkward.
Helen Crane, This is Money, adds: Although it is a valid option, it seems that making two separate offers might not have the outcome you desire.
The vendor may well turn down the lower offer, and could find your actions off-putting.
You could opt to have a less heavy-handed discussion about stamp duty with the seller, but their response will depend on their individual circumstances – for example how quickly they need to move themselves – and their view of you as a buyer.
On the one hand, they might appreciate your honesty and agree to split the cost with you if you do get landed with a stamp duty bill.
But come on too strong, and you risk making them think you might pull out of the sale if completion doesn’t happen by 30 June, or gazunder them – in other words, reduce your offer just before exchange in the hope that they will carry on with the sale anyway to avoid the chain falling apart.
There are steps you can take to speed your transaction up, for example making sure you have all your documentation ready to present to mortgage lenders and solicitors when they need it and responding to their requests quickly.
But if you are really serious about this property, perhaps it is better to view the stamp duty as a bonus, rather than pinning all your hopes on a completion date that might not happen.
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