Tuesday, 19 October 2021

About to sell your house? Seller, beware!

SELLING a property is, in principle, a relatively straightforward process: you decide you want to move, instruct an estate agent

SELLING a property is, in principle, a relatively straightforward process: you decide you want to move, instruct an estate agent on the sale of your own property and of course, get to work finding your new home.

Prices fluctuate (in truth, predicting the latest “hotspot” is very difficult and may involve taking risks on a property that needs work, or an area that is “up and coming”) and often the agreed price is determined by the urgency or need to complete the transaction for a desired time. When buying, the advice is usually to buy in the best area you can afford with the best schooling and infrastructure already but when selling, there are many more factors that must be considered, especially as legislation, technology and tax policies continue to change.

Here is Chancellors’ guide to the seven things you should be aware of if you’re planning to sell a house.

1) Changes to legislation regarding house sales

In the past when selling a house, the seller and their agent could rely on “caveat emptor” — buyer beware! This meant that when instructing an estate agent, the owner could avoid mentioning issues to their agent which may affect the desirability of their home and their agent was under no obligation to delve further.

Now things are changing as the government plans to repeal the Property Misdescriptions Act and have confirmed that agents are bound by the Consumer Protection Regulations 2008.This requires an estate agent to ask their clients questions regarding material facts that may affect the desirability or price of their home and it is an offence not to pass on material issues to potential buyers if they could have found out the information thorough simple means. Estate agents will no longer be able to just say they did not know.

2) Energy efficiency rating

With the government under pressure on carbon emissions and the need to raise increase revenue, the government could go the same way with property as it has with cars and combine the two. This could be done in a number of ways; council tax, stamp duty or fuel tax (unlikely). It’s easy to quantify how much energy a home uses from the metered use and bills and now all properties for sale require an energy performance certificate.

3) Council tax reviews and potential increases

Rarely enquired about by buyers, council tax has become more and more expensive. Chancellors predict that buyers will be looking at this more carefully in the future.

4) Home insurance prices

As the price of insurance continues to go up, the cost may also be more likely to influence a buyer’s decision. Any risk that makes your property more expensive to insure could therefore make it less attractive to buyers. One main problem here is risk of flooding as insurers have paid out lots over the last five years and with the Met Office announcing 2012 as the UK’s second wettest year on record, flooding is something likely to be on the minds of buyers. Insurers are not able to refuse insurance cover in high-risk areas due to agreement with the government, but this extra cost gets passed on in higher premiums.

5) Neighbour disputes

Any disputes with neighbours that are dealt with by the police or courts are registered. A buyer looking for a home may be put off if they find out you have previously had a dispute.

6) Lack of mains services

Estate agents will now have to be more up-front about the supplies connecting a property during marketing. Those owners without mains services could find themselves compromised. This will not have such an effect in rural areas where this is the norm, but in built-up areas this is likely to be something that buyers will more concerned by and may find less attractive.

7) Stamp duty

The government has already hiked stamp duty to unprecedented levels for the most expensive homes. The average stamp duty is around one to three per cent. For properties more than £500,000 it is four per cent, for properties more than £1 million it’s five per cent and for a property over £2 million, you now pay seven per cent.

In the last decade, property prices in some areas have aggressively risen and unfortunately (unlike the money for the purchase price of a home which can be borrowed against the home), stamp duty has to be paid in cash on the day of completion. Some buyers may have the earnings to borrow a large mortgage, but will struggle to raise the cash to pay the stamp duty. Any future raises in stamp duty could affect prices as buyers try to offset the outlay.

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