Can we refund part of stamp duty to encourage buyers?

acreed · 7 February 2007 at 12:49PM

Just a quick query regarding stamp duty.

We have been marketing our house at £269k, which I believe is a fair price (of course) but we are having a lot of difficulty generating offers above £250k due to the Stamp Duty threshold.

I can understand how this affects a purchaser and I was wondering if we could offer to repay the difference between the actual stamp duty on £269k at 3% (£8,070) and the stamp duty on £250k at 1% (£2,500) after completion as an incentive or if this has further reaching ramifications?

If this allowed us to get an offer of, say £260k then, even after refunding the difference between the stamp duty (£5,300) we would still be £4,700 better off than taking a lower offer, which would help pay to replace an old kitchen or bathroom.

Any comments received with intrest.

Al

Andy_L · 7 February 2007 at 1:54PM

It would be easier to just drop the price by 9k.

If your not getting offers at £269k then the market disagrees with you on it being a fair price.

boots_babe · 7 February 2007 at 2:02PM

I have to say I would disagree. We're currently in exactly the same situation - had our house valued 2 weeks ago at £275k by 4 different estate agents. However they all feel that the stamp duty threshold will be an issue. I don't want to just market at £249k as that has lost us £25k before even considering taking lower offers than the asking price. And yet to market at say £265k instead to try and compensate for the buyer paying additional stamp duty, makes it even less likely, in a way, that people will be interested, as it is that much nearer to the dreaded stamp duty threshold.

I have seen a lot of properties in the £260k - £275k price bracket that have an additional note on their marketing details to say that the vendor will consider doing some kind of deal on stamp duty. I think that this is a reasonable solution to the problem - although it is still difficult to get away from the fact that the stamp duty threshold is always going to badly skew property prices with lots clustered just under, and then not many just over.

silvercar · 7 February 2007 at 2:04PM

I agree, you need to do it and you need to use it as a marketing tool.

Search on one of the house price websites and see how few houses sell in the 250-260 range.

tigerminxy · 7 February 2007 at 2:07PM

Andy_L wrote:

It would be easier to just drop the price by 9k.

If your not getting offers at £269k then the market disagrees with you on it being a fair price.

I disagree. Your statement might be true if it was a fair market but the stamp duty threshold clearly has a distorting effect on anything around the £250k boundary, due to the stupid implementation that applies the higher rate of stamp duty to the whole amount rather than the extra above £250k.

acreed · 2 March 2007 at 6:37PM

boots babe

I have to say I would disagree. We're currently in exactly the same situation - had our house valued 2 weeks ago at £275k by 4 different estate agents. However they all feel that the stamp duty threshold will be an issue. I don't want to just market at £249k as that has lost us £25k before even considering taking lower offers than the asking price. And yet to market at say £265k instead to try and compensate for the buyer paying additional stamp duty, makes it even less likely, in a way, that people will be interested, as it is that much nearer to the dreaded stamp duty threshold.

Hope you are having more luck with your sale than we did. Here in Reading any price less than about £280k seems to be a signal for people to offer at £250k and blame it on the Stamp Duty. Just to make it slightly crazier, you get houses that are obviously actually worth considerably less being sold at that same price so by paying £250k you could end up with a house with a (non-market) value of anything from £245k-£270k.

I'm afraid that we did bite the bullet in the end and accepted an offer of £250k. Unfortunately, after lots of positive viewings no-one was willing to actually offer any more than £250k (A slight lie, we managed to edge someone up to £257k but they disappeared like scotch mist the day we made an offer on another house ourselves :mad: ) so I took the point about a house only being worth what someone will pay.

I would definitely consider offering to pay part of the Stamp Duty as I still think it could work. Alternatively, you could try putting your house on the market at £290k instead of £270k. Then the people who offer £270k will think they got a great deal and you might actually get the amount you want for your house (or no-one will come to view it but the market is still so quiet that you can guarentee someone will come).

Good luck

Al

boots_babe · 2 March 2007 at 8:03PM

acreed - so sorry to hear you didn't manage to get what you wanted. It really is a difficult situation, and whilst I can see it from the buyer's perspective I am on the side of a seller at the moment!

Well we only went on the market 3 weeks ago. We've had 4 viewings which we don't think is too bad - although not sure what 'average' is. No offers as yet but not too worried as it is early days. Will be very interesting to see what sorts of offers we DO get.

I think if we marketed at £290k we wouldn't get anyone round realistically, but we are definitely willing to do some kind of deal on stamp duty if someone makes an offer.

Well, all the best with completing your house move, hope it all goes well. We still have it all yet to come

NoddyDog · 18 March 2007 at 11:14PM

Hi, this is an interesting thread since we've found ourselves in the same situation. Just over a month ago we put our flat on the market. We had three estate agents in who provided the following valuations; £310K, 300K & 290K. Before Christmas our next door neighbour, with a very similar property (same layout), sold very quickly at £240K. We are not sure if they underpriced theirs.

Now our flat is in better condition (better presented for sure) than theirs and is also on the end of the block, hence quieter. Anyway we had quite a lot of people through the door in the first 10 days, but no offers. Because we need to move quickly, due to a new job, we decided to drop the price down to £275K. Again we had quite a few viewings within a short period, but again no offers. Our agent suggested we came down another £15K to £260K. However we felt we had already come down a long way and decided to come down to £265K.

Obviously we are very near to the 250K 3% stamp duty threshold and I now fully expect to get offers just below £250K. However after reading this thread I thought it may be worth offering to pay 2% of the buyers stamp duty, i.e. the buyer would effectively be paying just the 1% and thus the threshold would be irrelevant to them. Assuming someone accepts and pays our current asking price of £265K, I was wondering why on earth they would pay an extra £15K just to save £5K?

Is it because the stamp duty can not be added to their mortgage? Forgive me if this is a daft question, but this is the first time we've ever sold a property. If this is the case then I think it is worth us making this offer since we have a flexible mortgage with Virgin and could easily get hold of the extra cash. However I wonder if it creates extra hassle somehow in a way that I cannot think of. Any advice would be greatly appreciated.

NoddyDog · 19 March 2007 at 9:03PM

Update: earlier today we had an offer on our property of £250K. However tonight a different couple came back for a second viewing after their first one on Saturday. They were aware that we had an offer on the table, but obviously don't know what it is. Until tomorrow we won't know if they are likely to put an offer in.

We also saw today some speculation in the media that the budget on Wednesday would have something in it for first time buyers.

Being new to selling any advice on how to play this would be appreciated.

Can we refund part of stamp duty to encourage buyers?

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