Negotiating house price around the £125k stamp duty mark

MacMickster

Calleja wrote: »

I agree with this in principle. However, when buying a house, a lot of the time its the upfront cost that is the issue. If you haven't added the SD to your original budget, then an extra £1300, or whatever, is a substantial amount. I know I'm certainly not in a position to just magic that money up from somewhere!

So in the long term, 128,500 vs 130k is actually a better deal - but doesn't help being able to pay the SD now.

In that case you make £125K your final offer, and walk away if it isn't accepted. If you can't afford it, you can't afford it.

I would worry, however, about someone embarking on home ownership without any spare cash behind them. What would you do if the boiler packed up within a couple of months of buying the property for example? You may be better off waiting a few more months before buying any property and saving more money to have in reserve.

You might find that in 3 or 4 months you have plenty saved to pay the stamp duty, but if the property remains unsold then the vendor may be more amenable to accepting a lower offer.

Calleja

MacMickster wrote: »

In that case you make £125K your final offer, and walk away if it isn't accepted. If you can't afford it, you can't afford it.

I would worry, however, about someone embarking on home ownership without any spare cash behind them. What would you do if the boiler packed up within a couple of months of buying the property for example? You may be better off waiting a few more months before buying any property and saving more money to have in reserve.

You might find that in 3 or 4 months you have plenty saved to pay the stamp duty, but if the property remains unsold then the vendor may be more amenable to accepting a lower offer.

Completely agree, of course you need some spare cash behind you - but thats part of the budget, not available for the SD (although thats what some people will be tempted to do). You are right, you make the offer you can afford and walk away if they can't meet it.

But its kind of going off the point really, which is, is there are market for houses in that £125k-£130k price range? The fact is, anyone looking at houses in that range are thinking £125k max, to avoid the SD.

florence4

Just to update you on my situation...

I put in an offer at £125k on a house marketed at £132k, and was rejected outright. After a couple of days the vendor came back and said she'd accept £130k. After a lot of thought, I bit the bullet and offered £127.5k. The vendor rejected that too. I declined to raise again and left my offer on the table, while telling them I was now looking around again.

My concern is that the house is never likely to be worth any more than this - it's an ex-Council semi and I reckon it's on the market at/close to its peak. There's no way to add significant value to it, and a lot of risk that it might slip into negative equity... So, not worth the risk.

A house that you could extend or substantially improve would be different - it might be worth paying a bit more if you knew you could comfortably cover your costs when you came to sell, but not otherwise.

DRP

Calleja wrote: »

Are houses selling for £130k? I've seen a house I want to buy for just above this price but I haven't really budgeted for stamp duty, so I'm going to make an initial offer of just under £125k. However, I do think that the house is worth more, so I'm considering upping to £130k if they refuse (although it makes my initial outlay very tight indeed).

Are houses selling at the moment for £130k or am I being ridiculous even considering it? Anyone bought or sold a house in this price region recently?

a picture tells a thousand words... clearly many people do pay 130k - but a lot more pay 125k or thereabouts!

Strapped

The risk is that if you go over the £125k, the house has to increase significantly in value by the time you come to sell it, or else you will have the SDT issue when you come to sell too. So risk losing ££££s.

florence4

That graph is great, DRP! Unless Sept 2012 was an odd year, almost no-one buys a house just over the £250k SD threshold.