So what is Stamp Duty Land Tax?

Stamp Duty is a tax payable on most properties in the UK, as a buyer it's your responsibility to pay so make sure you and your conveyancer factor it into your budget

Stamp Duty Land Tax replaced the old Stamp Duty on the purchase of property in 2003. It is a tax levied by the government on property purchases, and needs to be paid by the purchaser.

How much you pay depends on how much your property is worth. The tax is banded, meaning you pay a certain percentage of the property’s sale price. It’s not like Income Tax, where you pay differing amounts on the various layers of your income; you pay a single rate on the entire amount you spent on your new home.

What are the Stamp Duty Land Tax bands?

At the time of writing, the table below was accurate. It made headline news when Chancellor George Osborne shook up the Stamp Duty regime with a much higher rate for mansions and removing previous assistance to first time buyers, who had not needed to pay anything on properties worth up to £250,000.

Property Value (tax rate)

£0-125k (0%)
£125,001-250k (1%)
£250,001-500k (3%)
£500,001-1m (4%)
£1,000,001-2million (5%)
£2,000,001 and above (7%)

Is there any way out of Stamp Duty?

Unfortunately, there is not a huge amount you can do. Previously, people would agree an asking price at, say £249,999 and then pay an inflated sum for fixtures and fittings, increasing the sale price in real terms while avoiding a tripling of the Stamp Duty liability, but the Inland Revenue keeps its eyes peeled for such tricks.

There is an exemption for people buying homes in areas the government recognises as disadvantaged. Disadvantaged Area Relief extends the 0% bracket to £150k. You can see if the area you are buying in counts as disadvantaged here.

There are other ways that property developers or local authorities can avoid or reduce their Stamp Duty bill listed here, but no such luck for everyday property buyers.

Obviously the simplest way to avoid Stamp Duty is buy a property beneath the tax threshold, but with family homes in much of the country starting around a quarter of a million pounds, it is an inevitable part of buying a house these days, and you should make sure you budget for it when you are working out whether you can afford a house.

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The remortgaging process is quite similar to the standard conveyancing process, meaning good conveyancers should be able to manage the task well. If you had a good experience with your conveyancer or conveyancing solicitor when you bought your home, make them the first point of call. If you didn’t, read our guide and don’t forget to get three quotes.

What will a conveyancer do?

Remortgaging your house can free up cash or get you on much better rates

Once you have instructed a conveyancer or conveyancing solicitor they should immediately get in touch with your existing mortgage lender to ask for the Title Deeds and a Mortgage Redemption Statement, which is basically how much you owe them.

You should by this stage have applied for your new mortgage, and a copy of the offer should be provided to your conveyancer, along with a form that many provide you with asking for the basic details of the remortgage.

Once they have these, the conveyancer or conveyancing solicitor will carrying out the searched necessary to satisfy the lender that the property is a viable asset to purchase – these are the standard conveyancing searches like the Local Authority Search.

They will get back to you and the lender with their findings, though there is less to be worried about with the search process when remortgaging – the stumbling blocks should have been found in the searches when you bought it initially.

Once that is done a completion date is set and you will be provided with a Mortgage Deed to sign and return.

Before completion, your conveyancer will ask your existing lender for an up-to-date Mortgage Redemption Statement so they know how much they should transfer at completion. Your conveyancer should bring it up but, if not, suggest that the completion date be set to mesh with the date your mortgage goes out, making it easier to track.

On completion day, your conveyancer will wait to receive the money from your new lender and use this to pay off the amount owed to your old one. The balance, minus the conveyancer’s fees, will then be sent to you straight afterwards.

The Mortgage Deed will then be sent to the Land Registry so their records for the property can be updated with the name of the new mortgage lender. The Land Registry will return them to the conveyancer, who will finally send them on to the new lender.

What are the pitfalls of remortgaging?

Unlike property purchases, there is no Stamp Duty to worry about when remortgaging, but that is not to say there aren’t extra financial considerations.

Before you embark on remortgaging, find out how much your existing lender charges to have the  loan ended early. This can sometimes be a significant amount. Also, your new lender could charge a reservation fee, and the cost of the conveyancer and any surveys your new lender could insist on needs to be added to the mix.

All of the above means it’s really important you get the best deal from your conveyancer or conveyancing solictor. Get those three quotes. Cost isn’t everything – go with the one you think will give you the best service – but it can mean the difference between remortgaging being a great way to handle your finances, and bit of a waste of time.

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Work out your market

When selling a house, remember that it will appeal to certain buyers more than others

If you are planning on selling a house, it is really important to ask yourself who is going to want to buy your home? Buy-to-let investors might want decent-size bedrooms, a family could be sold by outdoor space and young professionals might be most excited by transport links and a space to throw a party. The characteristics of your house or flat will make it a better option for a certain type of buyer so it should be marketed and presented to appeal to them most. But make sure not to put other types of buyers off too much.

Timing is crucial

The general lack of buyers in the market means those with access to finance can call more of the shots nowadays. That’s all the more reason, therefore, to bring your home to market at the right time. People selling a house in late autumn and during the winter will find there are less potential buyers about . All that changes in spring when people get back to searching and demand goes up relative to supply, giving buyers more of an advantage and increasing the chance of an acceptable offer being made. There is also another mini-rise in late summer/early autumn.

Appoint a conveyancer early

When selling a house, always get at least three quotes for the job and go through them closely. A conveyancer who seems too cheap to be true quite often is. They should be able to provide a pretty good breakdown of costs, as the process of selling a house is quite standardised. But it isn’t just about price, how good a conveyancer is at communicating can be just as important. And always make sure they operate on a no-sale-no-fee basis. If you get your conveyancing sorted early, they will be able to leap into action as soon as you have accepted an offer. Provide them with as much of the information they will need as possible and you can keep the conveyancing period short.

Tidy up and be ruthless

Most of us have shelves and cupboards full of stuff we don’t really need. Not only is clutter bad for us, it is also an obstacle to a successful sale. Buyers want to imagine a room with their possessions in it, and it is difficult to do that with books, DVDs and mementos from the four corners of the globe jockeying for space. Getting rid of superfluous belongings increases your home’s appeal to buyers and also helps you identify any area you might need to touch up. You’ll also be relieved when you are packing up after you have sold successfully.

Get the decorators in

Selling a house is much easier when you give it a fresh look before it goes to market

Inevitably a home suffers wear and tear. Living there every day it is hard to appreciate that process but you should objectively think about what a buyer might see that will turn them off your home. Damp is a very common sale killer, and will require months for the effect to be combated, so it is never too early to think about what work you will need doing. Make sure everything has been given a fresh lick of paint before your viewings start. A clean, new-looking property is critical if you are selling a house and want to do it quickly.

Know your price

Agents will not charge for a valuation so it is a good idea to get a few down to estimate the value of your home prior to instructing any. Always get at least three quotes. It is very simple to just go with the agent suggesting the highest sale price but take the valuations seriously, and combine them with your research on property websites like Rightmove.com and Land Registry data – which can be accessed through a number of sites – to gauge what the actual market value is. When selling a house, it is essential to have a realistic opinion of what it is worth. Otherwise you could turn down a succession of acceptable offers, or accept one that is far too small.

Spread the word

The internet has revolutionised the way people approach selling a house. There are countless sites devoted to finding people their dream homes. The vast majority of buyers’ journeys now begin online but you can give yourself and advantage by thinking outside the box. You can market your house on sites like eBay and Gumtree, tweet about it or just mention to your friends, neighbours and families that you are looking to sell. The future buyer of your home could easily find out about the availability through word of mouth. And always, always have a board up.

Leave viewings to the pros

Your agents are going to charge you when your home is successfully sold so at least make them work for it. An agent will have been on countless viewings and will most likely be better at selling a house to prospective buyers than you. Go out when a viewing is taking place, and make sure you have left your house uncluttered and spotlessly clean – this is especially important if you have pets. Buyers want to imagine living in a place, not feel like they’re trespassing. Air the place out, make sure the heating is on and if you have a parking space make sure it is available for the buyer.

Prioritise the buyer over the price

This is where a good agent will come into their own. They should be finding out as much as they can about the buyers and feeding that information back to you. It could be tempting to favour an offer that beats or comes close to your asking price over a lower one from a higher quality buyer. But the quality of the buyer is the biggest consideration, especially when selling a house quickly. Do they have a mortgage arranged already? Are they a cash buyer? Have they bought a property before? Are they part of a chain, and how long is it? All these questions contribute to how strong a buyer someone is, and a stronger buyer means a much higher chance of the sale going through.

Drive the conveyancing process

So you have accepted an offer and the conveyancing process has begun. Now, if you’ve played your cards right you will have instructed a helpful, communicative conveyancer who will stay on top of everything and get in completed nice and quickly without your input. Realistically, you need to be prepared to be the person that keeps everything flowing, however. Speak to your conveyancer weekly to find out how things are progressing and if there is anything you need to provide. Taking this proactive approach not only keeps less attentive conveyancers on the case, it also makes the better ones aware what kind of client you are and encourages them to be equally proactive. The quicker you can get the conveyancing process done, the quicker selling a house will be.

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When evaluating the affordability of a property, always make allowances for improvements or repairs, the cost of moving, and conveyancing fees. When instructing a conveyancer or conveyancing solicitor, make sure you get as full a quote as possible, and be sure you are as aware of every cost as possible.

The biggest chunk of the conveyancers quote will be Stamp Duty Land Tax, which the government levies on every property bought over the value of £125,000. In the budget last month, first-time buyers had their special allowance – which exempted them from the tax on properties up to £250,000 – removed while properties worth over £2,000,000 became liable to 7% SDLT, or 15% for overseas buyers.

The table below shows current SDLT liabilities, and so long as whoever is quoting to do your conveyancing work know the value of the property you are buying or intend to buy, they should be able to give you a very good estimate of this figure.

So if you are buying a property worth £250,000, £2,500 of your extra costs will go straight to the government in the shape of SDLT. In addition there will also be the fees levied by another government body – the Land Registry – for registering your purchase. Again this figure is simple to estimate accurately,

Other expenses you will face are any costs related to the mortgage lender advancing you the agreed loan amount to finance the purchase, any survey costs they insist upon and the various charges conveyancers and conveyancing solicitors incur in carrying out their searches.

The professional that is dealing with your conveyancing will deal with transferring all these sums and could well include them in their quote – it is always worth asking for a thorough quote and taking time to go through it with them, it gives you a good idea of their communication skills and whether you will have a good working relationship as much as anything.

Then they have to take their fee for doing the job itself – factoring in their overheads and, of course, some profit to make it worthwhile. It will be no consolation to you as you feel the hole left in your bank balance and wilt at the scale of the task of doing up and moving into your new pad, but the amount of your conveyancing fees that your conveyancer actually gets to keep is smaller than you would originally think.

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NewBuy mortgages will make new build property more accessible to buyers

Last month, Barclays, Nationwide and NatWest signed up to the government’s NewBuy scheme, potentially bringing good news to frustrated buyers who have struggled to raise sufficient deposits.

NewBuy was launched back in early 2011 and has been given a largely warm reception. But it seems that, while many stand to benefit, it will not assist all potential buyers.

NewBuy covers English new-build property worth up to £500,000, and sees housebuilders lend 3.5% of the sale price to the mortgage lenders while the government guarantees 5.5% of that sum in the event that there is a price crash.

In exchange, mortgage lenders will offer 95% mortgages on the properties, enabling buyers to make their purchase with smaller deposits. Of the three banks, NatWest rates, at least on the surface look the best (see the table below) but all three sets of figures suggest a serious commitment to the plan.

The government boldly predicts the scheme will help 100,000 buyers – most of them first-time buyers – and enable the employment of 50,000 construction workers by a number of major housebuilders including Barratt, Bovis and Taylor Wimpey.

Halifax will announce its NewBuy products this month and a growth in backing by the major lenders should see an improvement in the terms offered.

With a £200,000 property now possibly requiring ‘just’ £10,000 up front, there will be many buyers looking to take advantage.

But while a reduction in the deposit required helps tackle the issue of very high rents would-be buyers are having to pay, it does not tackle the major issue of overall property prices remaining out of reach for so many.

Arguably a scheme that helps prop up the housebuilders helps keep property prices artificially high, as otherwise the developers would have to drop their price.

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House prices in Stratford have been affected by a rise in homes being built

No sooner had London won its bid to host the 2012 Olympic Games than the capital’s property gurus were predicting Stratford would be the new hotspot for London’s property investors and buyers looking for homes with a scope for rapid growth in value. But on the eve of the Games, figures show their predictions were wrong.

When the Games were announced in 2005, the average Stratford home was around 20% less than the capital’s average. Nowadays that stands at 35%. Had you followed the expert’s advice and plumped for Stratford to buy a house, or make a buy-to-let investment, you would, financially at least, be worse off than if you had chosen practically anywhere else.

So what is to blame? Unquestionably people have been drawn to the area, no doubt thanks to the hyperbole but also because of proximity to the games and developments in the area. But the rate at which thet have been attracted is far outstripped by the rate at which new properties have come on stream.

The construction industry has been the real winner in Stratford, increasing the number of dwellings in the area by 80%. In other words, supply has grown faster than demand and, just as if a grocer had more apples than people interested in buying them, the inevitable reaction is to drop prices.

Once the Olympics are over there will no doubt be fantastic new infrastructure in the area that will give it plenty of strength as a neighbourhood – not to mention the shopping on offer at Westfield Stratford City – but demand could well drop off even more, leading to a further widening of the gap between the area and the rest of London.

So why is this relevant to you if you don’t live there, or plan to? The moral of the story is to keep an eye on the basics if you are buying a home with an eye on property value as well as quality of life. Improved transport links and general attractions in an area will have an undoubtedly positive effect, but think twice if you see evidence of new homes being built on a massive scale – evolution not revolution is the name of the game.

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Delays caused by HSBC's mortgage panels could be jeopardising deals

There are widespread reports of increased delays in conveyancing for HSBC-backed purchases with sellers pulling out of transactions and estate agents advising against seeking loans with the bank.

A Law Society letter to its members said: “It is clear that for house buyers using HSBC … delays are emerging and the Society understands that a number of estate agents are beginning to associate HSBC mortgage customers with delays in the process, which threaten … already very delicate property chains.”

HSBC customers have the option of opting out for just under £200 but, even then, have not been immune from the problem: conveyancing done by independent conveyancers or conveyancing solicitors still needs to be checked by an HSBC conveyancing panel member and this is reportedly adding at least a week to the conveyancing process.

HSBC has defended its panel, saying the policy has not been in place as long as the average time it takes conveyancing to be completed, and others have suggested the influx of customers to HSBC thanks to preferable rates is a significant contributor to any delays.

Regardless of whether HSBC’s system is fundamentally flawed, the matter highlights the issue caused by mortgage lenders’ conveyancing panels.

The convenience of going through an official partner, or the necessity of working with one in order to secure funding is understandably attractive, but it pays, wherever possible, to exercise an educated choice.

Membership of an official conveyancing panel is by-no-means an indicator of superior quality or services and, as the lender sets the terms, will almost certainly not represent the best value for money conveyancing service.

If you can use your own conveyancers, looking through forums or speaking to acquaintances to find the best-rated service, asking at least three firms to quote and then analysing the costs presented to you – and additional service points such as online case tracking and how good you feel they are at communicating – will give you a better chance of a timely, relatively stress-free conveyancing process.

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In George Osborne's 2012 Budget Stamp Duty Land Tax was toughened

In the 2012 Budget Stamp Duty Land Tax was one of the biggest headline grabbers. The Chancellor announced an increase Stamp Duty Land Tax on properties worth more than £2 million. That attracted the attention, but of more significant news was the loss of 0% SDLT on properies up to £250,000 for first-time buyers.

What is Stamp Duty Land Tax?

SDLT is a tax applied on almost every property purchase made in the UK. Unless your are a DIY conveyancer your conveyancer or conveyancing solicitor will fill in the land transaction return and transfer the amount owing in SDLT to HMRC.

When quoting to carry out your conveyancer, a conveyancer or conveyancing solicitor can easily make an estimate of how much you will owe in SDLT just by enquiring as to your budget and applying the relevant percentage which must be paid. You can also use an online SDLT calculator on the HMRC website. This can be a very useful aid when assessing how far you can stretch for a new home.

Following the 2012 Budget, the current percentages for residential properties are as follows:

What difference has the 2012 Budget made?

While the big news may have been the big hike on mansions, the biggest impact will be for first-time buyers. Before the Budget, because of tough market conditions where money was hard to come by and house prices still high, they did not have to pay SDLT on properties up to £250,000. That has not been done away with, so first-time buyers will need to find an extra couple of thousand pounds to give to HMRC. Not good news for a group of people already squeezed by such high rents.

Those most affected are the ones buying and selling property worth at least £2milliom

For the vast, vast majority of us there is no difference to the SDLT liaibility we can expect to pay, or at least no direct differences.

The people affected are those buying very expensive properties. Overnight, the amount that someone buying, for example, a £3,000,000 home would pay in SDLT jumped from £150,000 to £210,000. It is a big rise, even for people buying properties of that kind. Overseas buyers, who regularly buy the most valuable properties on the market, will face SDLT of 15% on properties over the £2 million mark.

Around 80% of properties in the higher tax band are in London, and some agents and experts warn of a possible downturn in transactions at that level and the faltering of a trickle-down system that has kept the capital’s house prices buoyant.

How is SDLT calculated?

Unlike Income Tax, SDLT is calculated at a single percentage rate. So if your new home costs £251,000, all of that amount will be taxed at 3% rather than just the last £999. This is why you see properties valued at £249,999 or £250,000 and then usually a big jump up to £260,000.

Now that the SDLT chargeable on the most expensive homes has risen so drastically, it is likely that there will similarly be a small number of properties valued between £2,000,001 and £2,200,000. Bad news for people looking to sell.

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Conveyancing Tips: freehold conveyancing is standard when buying a flat and can take much longer to compete

1. The Council of Mortgage Lenders reckon 28% of home sales fall through because of buyers having second thoughts.
2. When budgeting for the conveyancing fees, make sure you leave enough for disbursements, they will be incurred. It’s important to get as many of the possible costs agreed with your conveyancer or conveyancing solicitor when they are quoting.
3. Make an allowance of about £300 for extra searches that could crop up.
4. If you live in an area where mining took place – or still does – then your conveyancing process will include a Mining Search, for instance.
5. Owners of properties near old churches could be obligated to contribute to its upkeep. The obligations is called a Chancel Repair Liability, and your conveyancer or conveyancing solicitor will carry out a search to find out if this applies.
6. While local knowledge can occasionally be useful, it is really not necessary to confine your search to conveyancing firms that are local to you or the property you are buying. Almost all of the conveyancing process is uniform wherever you are buying, and you can get great value for money from online conveyancing services.
7. In fact, with case tracking, online conveyancing can be a quicker way of doing it. Though, as always, it is down to the service you use.
8. Make a realistic estimate of how long it is going to take for your conveyancing to be finished. A standard sale takes around three months.
9. A conveyancing process involving shared ownership or the purchase of a leasehold – which is the norm in places like London – will take longer and will most likely be pricier.
10. You can make the conveyancing process quicker by instructing your conveyancer or conveyancing solicitor before you accept an offer or have one accepted. Also, ask them what details you can give them immediately to get as much of it done as possible.

You can read Part One here.

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Conveyancing tips: George Osborne had bad news for first time buyers in his budget, removing the 0% rate on properties worth up to £250k

1. If you are buying a home with someone who has bought a property before, you won’t qualify as a first-time buyer.
2. Following the 2012 budget, first-time buyers are no longer exempt from Stamp Duty on properties worth up to £249,999; make sure you factor in additional costs when budgeting.
3. Speaking of which, typical conveyancing fees are around £550 plus disbursements (expenses that you will have to pay) plus VAT. If you’re buying in London or the South East, expect that to be higher.
4. If a conveyancer or conveyancing solicitor quotes much less than that, be cautious. They might be trying to pull the wool over your eyes, or maybe their focus is on price rather than value for money.
5. Always get at least three quotes before deciding on who will do your conveyancing, unless you have used someone before that you got great service from. Compare the quotes closely just to see if anyone is hiding costs to keep their quote low.
6. And if any prices are left off, then ask why. You don’t want to be stung by a much higher conveyancing bill than you bargained for.
7. As much as price, it’s really beneficial to go with a no completion no fee conveyancing service, otherwise the heartache of a sale not going through could be compounded by a bill for ultimately unnecessary conveyancing work.
8. Another thing to look out for when considering which conveyancing service to go for is whether they offer online case tracking. It’s a brilliant way of staying on top of where your case is. Even better if it’s free.
9. It really makes very little difference whether you go for a conveyancing solicitor or a conveyancer, they both specialize in the same thing. Just be sure that they are certified, either by the Law Society or the Council for Licensed Conveyancers.
10. Only consider doing your own conveyancing if you know exactly what you are doing. Otherwise it will be time consuming, stressful, and could be a disaster if you haven’t done it right. Your home is too precious and expensive to jeopardise. Some mortgage lenders have such little trust in DIY conveyancing that they won’t lend money to them.

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