Stamp Duty thresholds help lazy estate agents
Monday, April 23, 2012 | by Ed Mead
There seems to be an awful lot of confusion and taking advantage by those seeking to manipulate the SDLT thresholds.
Much is said about activity around the £250k/£500k/£1m/£2m figures but there’s a lot that isn’t said that merits discussion.
Let’s start with an [admittedly rarefied] example of a house that was agreed, before the Osborne budget, at £2.06m. The buyer had therefore woken up on the 21st March expecting to pay £103,000 in SDLT and gone to sleep contemplating a £144,200 bill, both outrageous obviously but nevertheless an increase of £41,200. For reasons best known to himself the buyer waited a few days and then decided to reduce his offer to £1,999,999 showing a lack of understanding on two levels. Firstly, and pedantically I’ll admit, that the 7% payment doesn’t come in until you pay OVER £2m, so at £2m it’s still 5%. This makes like an awful lot easier for everyone, especially those who have to do any mathematical calculation related to the sale price. I get worried when people don’t understand this as whoever’s advising them worryingly hasn’t done their homework properly. Secondly since when has reducing by £60k, and trying to reduce SDLT liabilities by a further £40k, been warranted. At worst he could have asked for a £41,200 reduction to offset his new liability. But he didn’t, he tried it on because he thought sellers would be worried. Luckily the suborn sellers stuck to their guns, we told the buyers to get knotted, and the deal went through as agreed.
The issues raised here are all too easy for unscrupulous agents to use against a seller’s best interests.
Bearing in mind the example above there’s really very little excuse for letting a tax threshold bother you. It’s just lazy estate agency that allows clients to be told that to market below a threshold will mean you’ll sell more easily when asking a bit more might be the right market price and yield a higher sale price. Especially at the upper thresholds spending an extra £10k or even £40k on tax is unlikely to hinder your search.
With that in mind please think twice when your agent suggests that a Stamp Duty limit is creating an issue. At a time like this when many agents have been tempted to overprice to get stock onto their books Stamp Duty issues are the easiest, and laziest, way for them to get a price reduction.