Stamp Duty Reforms – The New Facts

George Osborne, the Chancellor of the Exchequer, in his autumn statement on the 3 December 2014 made unexpected and radical reforms to the Stamp Duty system, these new rules coming into effect from midnight of that day.

What is Stamp Duty ?

Stamp Duty Land Tax, to give it its full name, is a tax you pay when you buy a house. The tax is calculated according to the purchase price of the property.

What are the changes ?

The changes apply to you if you are buying a home in the UK for over £125,000. These changes do not affect commercial properties.

Under the old rules you would have paid tax at a single rate on the entire purchase price.

Between £125,001 – £250,000  1%
Between £250,001 – £500,000  3%
Between £500,001 -£1m  4%
Between £1m -£2m  5%
Above £2 m  7%

Under the new rules you only pay the rate of tax on the part of the property within each tax band just like income tax. Below are the new rates.                            

Between £0 – £125,000 0%
Between £125,001- £250,000 2%
Between £250,001 – £925,000 5%
Between £925,001-31,500,000 10%
Between £1,500,001-over 12%

Therefore if you bought a house for £150,000 under the old regime you would have paid 1% of tax on the whole amount- a total of £1500 whereas buying the same house under the new rules means you will not pay any tax on the first £125,000 and 2% on the remaining £25,000. This works out at £500, a saving of £1000. If you were buying a house at  £300,000 before 4 December 2014 the Stamp Duty would have been  £9000 but now there would be no tax to pay on the first £125,000 , then 2% on the next £125,000 (£2500) and 5% on the last £50,000 (£2500) making a total of £5000.

Is this good news for everyone?

HM Treasury advises that Stamp Duty will be cut for 98% of people who pay it. However, anyone spending more than £937,000 will face a higher bill. If you are purchasing a home for £2.1m you will be liable for tax of £165,750 under the new regime versus £147,000 previously.

Changes in Scotland

In Scotland the new rates will apply only until the 1 April 2015 when the Land and Buildings Tax replaces Stamp Duty. This will also be calculated like income tax. There will be a tax free allowance of £145,000 on each transaction. Above that there will three bands:

Between £145,001 – £250,000 2%
Between £250.001 – £325,000 5%
Between £325,001- £750,000 10%
£750,000 and over 12%

If you would like to discuss the impact of this new land tax please contact me on 0141-552-3422 or by email rjl@mitchells-roberton.co.uk and I will do my best to help.

My Top Tips to Sell Your Home

Mark Hordern of GSPC on 1 October 2014 commented that the “property market in Glasgow and the West of Scotland lost momentum over the summer as house price growth and selling times stalled. But much of the apparent ‘pause’ in the market could be attributed to one off events such as the Commonwealth Games and the Referendum on Independence.” That said, Professor Gwilym Pryce , Director of Sheffield Methods Institute at Sheffield University who has analysed recent GSPC’s sales data points out there are some early indicators that activity levels are now recovering and there is the  prospect that many would-be movers who had put their sales on hold will now look to make up for lost time.

So the housing market remains uncertain but it is not all doom and gloom. There are always things you can do to maximise your chances of selling your property. Here are my top tips……

  1. Choose the right estate agent

Selling a house is a stressful business so choosing the right estate agent who is going to minimise worry and maximise results is a vital first step. This is where Mitchells Roberton can help .As lawyers and members of GCPC we provide an outstanding sales service. The firm has an impressive track record of selling houses. Our experience, together with probably the best property advertising package available, ensures your home will get maximum exposure. If you would like a free, no obligation valuation of your home please contact me Bridie Gillan on bg@mitchells-roberton.co.uk  or by phoning 0141-552-3422.

  1. Take home price indices with a pinch of salt when establishing an asking price

At the moment we are being constantly bombarded with conflicting reports of house prices rising and falling. So often these contradictions exist because they rely on different data. For example Nationwide and Halifax house price indices base average property values on mortgage valuations whereas the Land Register records what the home actually changed hands for. The Rightmove house price index uses asking prices. With twenty three years of experience , being a qualified pre-sale valuer and having an intimate knowledge of the property market in the West of Scotland I can assist you when it comes to establishing  the best asking price for your home. Just contact me on bg@mitchells-roberton.co.uk or by phoning 0141-552-3422.

  1. Increase your property’s ‘kerb appeal’

First impressions are crucial. You want a potential buyer to walk up the path already feeling impressed and wanting to see more. So make sure your garden is clean and tidy, an overgrown jungle could see a purchaser running miles. Put up hanging plants, move bins out of view and clear away anything unsightly. If your gate or fence looks tired brighten it up with a lick of paint. A well maintained or newly painted front door will create great impact. Do you have a doorbell? Does it work? Inspect your roof and windows. Make sure there are no slipped tiles or leaking gutters and that the windows have no flaky paint and that they open properly. Check the render or cladding on the exterior of your property. Exterior problems may put potential purchasers off if they think there is a larger underlying problem which simple maintenance and attention before putting the property on the market could rectify. I can recommend reliable tradesmen if needed.

  1. Spruce up

Making your home attractive does not mean an expensive decorative overhaul. The chances are the buyer won’t like your decor in any event and it will be replaced as soon as they move in but you should freshen up rooms with a coat of paint in a neutral colour making them as light and airy as possible.  Are your carpets and floor coverings clean?  A mirror hung in the hall can give the suggestion of more space and a few vases of fresh flowers or some plants can freshen up your house. If you do have a pet ask a friend or relative to look after them during viewings. You may love your furry friend but a buyer may not. Don’t forget the detail either so get round to those annoying little maintenance jobs such as a long overdue light bulb change and a clean of the grouting and sealant in the bathroom. Again I can recommend reliable tradesmen if needed.

  1. De-clutter

A de-clutter is a must. Purchasers need to be able to picture themselves living in the house so it is essential that each room is shown off to highlight its purpose. If your dining room table is covered in work papers or an exercise bike is in the room move them out and return the room to its original use. It is important also to de-personalise. Try to remove personal pictures and ornaments. Take down posters in the kids bedrooms and clear the kitchen work surfaces so potential purchasers can see the potential in the house and where they would put their own items.

  1. Stay out of the way

Your house is now ready and has been placed on the market. You have freshly ground coffee perculating as your potential purchasers come to view. Let them wander freely around the house with the agent. You want them to feel comfortable and to be able to spend time looking at each room freely. Of course you should be ready to answer any questions after the viewing.

  1. Choose the best buyer

Once the offers are on the table your next big job is to choose the most reliable purchaser. Safer buyers include ones who have already sold and are in rented accommodation , chain free first time buyers and cash purchasers but you might not have the luxury of this choice if you only have one offer. Obviously there are other considerations such as how quickly you need to sell and whether you have found your own new home.

  1. Consider alternatives

You may have followed all my tips but in the current market there are no cast iron guarantees that your property will sell. So do not be down-hearted. If your motivation to move is space then consider building an extension. It will provide the generous extra space you need and add value to your property until the market is more buoyant.

I am always here to answer any questions you may have by contacting me on bg@mitchells-roberton.co.uk or by phoning 0141-552-3422. Happy selling !

Found your dream home? Follow these tips

With the right advice buying your home needn’t be stressful. Despite a conveyancing transaction being relatively routine and commonplace many people are mystified about the process actually involved so I hope this simple step by step guide will help you.

STEP  1. Get in touch

When you’ve found your dream property please call us on 0141 552 3422. We will then contact the estate agent marketing the property to let them know you are interested and to find out if there is a closing date. We will discuss with you how you will be funding the purchase and can put you in touch with an independent mortgage adviser if required. At this point we will advise you what our fees will be. Our fees are very competitive and represent excellent value for money. We will also get ID from you as required under money laundering regulations. This initial consultation is FREE.

Step 2.  We send the offer

Once all of the above is in place we will send the seller’s estate agent the offer. Our conveyancers know the local market inside and out and can help you get the best possible deal on your new home. If the offer is acceptable the estate agent will pass it to the seller’s solicitor who normally will issue what is known as a “qualified acceptance”. This is basically an acceptance of your offer with conditions attached. We will then negotiate these conditions for you. This process is known as the “Missives”. The missives are not one document but are a series of letters exchanged between the purchaser’s and seller’s solicitors negotiating the deal on your behalf. Contrary to popular belief these do not need to be signed by the purchaser or the seller.

Step 3. Title deeds and reports

At this point we receive certain documents from the seller’s solicitor. These will contain the title deeds and reports relating to the property. “Title to the property” is the legal way of saying that the seller owns it and thus has the right to sell it. If the seller does not have this right because the title is defective in some way then title cannot pass to you. We will therefore examine the title deeds to ensure that everything is in order. If there are any doubts about the titles we will resolve matters at this stage. We will also enquire as to whether the property has had any alterations carried out and whether it has been or could be affected by coal mining. We will receive a Property Enquiry Report which details various matters relating to the property and its immediate surroundings such as drainage and road proposals. An account of the titles and reports will be given to you. We pride ourselves on the quality of our communication and clarity of our advice so our explanation of the titles should be readily understood. Our conveyancers are all friendly and approachable and will  gladly answer any questions you may have.

Step 4  We exchange documents with the seller’s solicitor

Now we will prepare a disposition which is the deed signed by the seller that formally transfers title to the property to you. Once agreement has been reached with the seller’s solicitor on the terms of the missives, titles and reports, the missives for your purchase are concluded which means there is a binding contract in place between yourself and the seller with a date of entry , being the date your new home will legally be yours.

Step 5 .The Standard Security

We will take your instructions regarding the mortgage and explain in clear terms just what you are getting into. As the mortgage is secured against your home it is very important that you understand the terms of your mortgage. We will get the Standard Security signed and report on the title to your lender. We will also request your loan funds from the Bank ensuring these are received in sufficient time for settlement.

Step 6.The House is paid for

At this point the financial aspects of the transaction are settled. The price of the house is paid together with the fees for registering your ownership of the property with the Registers of Scotland. We will also submit the Stamp Duty Land Tax Form on your behalf and if the value of the property exceeds £125,000 we will arrange payment of the stamp duty due. SDLT (if due) is paid.

Step 7 Moving in day.

Now you are on your own! Remember to check that everything is working in your new home and let us know of any faults immediately. Good luck and we wish you much happiness in your new property.