With house prices rising at the incredible rate that they have done over the last decade, the cost of moving has increased with it. This means that home buying and selling costs are now, unfortunately, greater than ever, and have made the whole process of moving even more expensive. Although some of these costs can be wavered or reduced, many of them are dictated by the cost of the house and therefore are set prices.
Stamp Duty Land Tax
This is the biggest single cost you will incur while moving house, and unfortunately cannot be reduced or got rid of. This is a tax which is paid by the buyer to the government, just for selling the house. Stamp duty land tax rates have increased by four times since the current Labour government came into parliament in 1997, and the last increase was in 2000.
- For properties less than £60,000 the tax does not have to be paid.
- For properties which sell for between £60,000 and £250,000 the tax is 1% of the selling price.
- For properties which sell for more than £250,000 the tax is 3% of the selling price.
- For properties which sell for more than £500,000 the tax is 4% of the selling price.
There used to be a loophole in the system which meant that the buyer could reduce the stamp duty tax they had to pay, by paying over the odds for fittings and fixtures. However, on 1 December 2006 new guidelines were brought in to try and prevent tax evasion, and this method is now no longer possible. Under these new rules extensive forms have to be completed, and the Inland Revenue has threatened that it will be conducting numerous random checks on houses which fall just below the cut-off line, to check that everything is in correct order.
A few years ago, an exemption order was introduced by Gordon Brown to try and help regeneration in certain areas. There are “designated disadvantaged areas” within the UK, and in these areas if you buy a house which costs less than £150,000 you will be exempt from paying stamp duty land tax. To find out which areas are in these “designated disadvantaged areas” look on the Inland Revenue website
. Your estate agent should also be aware of whether the house you are interested in buying is in one of the areas. However, the areas are very specific and can vary street to street so it is best to check directly with the Inland Revenue as well.
Although estate agents are not a set requirement when buying or selling a house, most people tend to use them to make the process easier and quicker. It also means that you will have access to a much wider range of houses, and can prevent any potential dangers which can occur during private sales. They also have a level of expertise that you will not have, and will hopefully be able to get you the best price for the house you want. However, this does all come at a price.
Estate agents will charge a fee for their services of between 1% and 2%, which will vary according to where you live. The National Association of Estate Agents (NAEA) admits that there are certain places in the country where it will cost more to sell your house, so this is common practice and you will generally find that all estate agents will charge the same for an area. In London some estate agents will even charge as much as 3%, which, if you consider how expensive house prices are in the capital, will be a large percentage of your selling price.
Make sure that you check with the estate agent as soon as you apply to go on their books what their fee is, so you can work out what the competition with other agents in the area is like. This may end up swaying who you sell your house with. It is sometimes worth trying to haggle with the estate agent, especially if you have found another agent who will sell your house at a cheaper rate but you would like to sell with this particular agent. However, it is quite likely that a good agent will not need to say “yes”, and so one that will may not be a good choice to go for.