Buying a central London property - help!

natalie685

Hi,

I've been viewing 1 bed properties in WC1 and W1 area for the last 2-3 months and last week found the perfect one. Perfect location, great building, secure with porter etc, floor plan and sizes of rooms great.

Problem is my budget was £250k - wanted to avoid the extra 2% stamp duty as does everyone!

This property has been on the market for 2 months at £290k and just recently been reduced to £280k. We wanted to make an offer of £255k (5k for f+f) but the estate agent kept saying no way, it's just too little etc. We said £260k, he said we'll see what I can do.

Anyway, I've been thinking about it and it just doesn't make any sense to pay over 250K and pay so much extra.

Would an offer at 250K be unreasonable? To me it sounds like a reasonable price for the flat but the estate agents keep banging on about £270k being a good offer price.

Any ideas anyone? I'm a first time buyer and a bit clueless!

Thanks

Woby_Tide

there was a similar question here a couple of days ago I think(can't find it sorry) but they suggested stuff like offering to pay the sellers agency fees etc. to get the cost under £250k etc., there were some other suggestions about other items you could pay for that could be classed as being part of the 'purchase price'

John_M_Business

Set your offer price and stick to it, remember that you're going to have to live with the mortgage etc. when it comes to it.

The stamp duty is a pain in the neck, but just remember it's all a part of the overall 'deal', so why not offer the maximum amount you're willing to pay, minus the stamp duty, as for the fixtures and fittings to be included and say that's your final offer. If the total comes to £260, then the offer price should be around £252,500.

In the end, if they can get more, then great, but if not... move on.

cedge

Ignore the estate agent, they have a duty to put all offers forward to the vendor. Put in your 255k (inc 5k for F&F) and see what happens, they can only say No, if this happens then you can reconsider your position and finances.

If your a FTB then this would be a seriously tempting offer as the owner has reduced the price of the property quickly which seems to suggest that they are looking for a quick sale plus I understand that the market in London is as flat as a pancake?

lush_walrus

£25,000 reduction sounds quite a lot to me on a property that has just been reduced by 10,000 and only been on the market for 2months (very short period of time in most areas of London at the moment).

If I was you I would ask the estate agent what they would consider to be a realistic offer. The agent will more than likely already know the vendors bottom figure.

But as John_M_Business has stated above, you can only offer what you can realistically afford and if you don't manage to get this one reduced to a price you can afford, apply that same principal for looking at properties too.

At the end of the day, if you look over and above what you can afford or want to pay, then it is inevitable that you will find something which you prefer. Its the equivilant of having a look in Selfridges when you normally shop in H&M!

cedge

As the OP has said 250k is the 2% stamp duty limit therefore putting the house on for £280k the vendor/estate agents must know that it would be highly unlikely in this market to go for anything above 250k.

You could put in a higher offer if the vendor agrees to pay your stamp duty and thus bumping the price up to maybe what the vendor would accept.

lush_walrus

cedge wrote:

As the OP has said 250k is the 2% stamp duty limit therefore putting the house on for £280k the vendor/estate agents must know that it would be highly unlikely in this market to go for anything above 250k.

Not true, this is true of properties which are valued close to £250 (ie 255,000 or 260,000) but not those which are £30,000 above (originally 40,000 above)!

Stamp Duty is 3% not 2%, and for a property at this price equates stamp duty would equate to £8,400. If the property were £250,000 then 1% would be due at a cost of £2,500. Therefore according to the fact that it is presently for sale at £280,000 the extra cost in stamp duty is £5,900.

So why in view of £5,900 'extra' cost to the buyer, would the property suddenly not be worth £280,000?

Also, the ability to pay extra under fixtures and fittings has been tightened up. It is now very difficult to justify £5,000 worth of fixtures and fittings, especially when close to the 3% threshold. Speak to your solicitor prior to offering £255,000, as chances are you will be adviced not to risk it. The days of paying £5,000 for carpets, curtains etc are long gone!

meanmachine_2

lush_walrus wrote:

Not true, this is true of properties which are valued close to £250 (ie 255,000 or 260,000) but not those which are £30,000 above (originally 40,000 above)!

I disagree, and I'm a potential buyer, so my opinion is rather pertinent, wouldn't you think?

ANY property "valued" at less than £300K will not extract an offer of more than £250K from me. It just won't. Just because greedy vendors have put it on at £280K - probably £15K above its EA valuation - that doesn't mean that is its true value. That just means a greedy vendor is trying it on.

Especially when I can check up on nethouseprices and see that these same greedy vendors paid "just" £150K for it in 2002.

I don't care what a vendor might think they property is worth. Yes, £280K is a fair price if, in 6 months' time it might be "worth" £315K. But at the moment it's just as likely to have dropped in value. So why on earth would I pay that price? Can you understand my thinking?

meanmachine_2

I can see the logic in that.

But you won't be paying £260K, you'll be paying that, plus 3% stamp duty, plus all the moving fees - which will probably bring you back up to £275K.

I think that's exhorbitant, even for the most central of central London properties, but I'm just old fashioned.

Good luck and let us know how you get on!

EDIT: London leads the rest of the market and according to Hometrack has been experiencing falls over the last year (around 4% i believe). Personally I wouldn't live in central London. A neighbouring borough is a lot more desirable, and more expensive. But again, it's your call.

lush_walrus

meanmachine wrote:

I disagree, and I'm a potential buyer, so my opinion is rather pertinent, wouldn't you think?

ANY property "valued" at less than £300K will not extract an offer of more than £250K from me. It just won't. Just because greedy vendors have put it on at £280K - probably £15K above its EA valuation - that doesn't mean that is its true value. That just means a greedy vendor is trying it on.

Especially when I can check up on nethouseprices and see that these same greedy vendors paid "just" £150K for it in 2002.

I don't care what a vendor might think they property is worth. Yes, £280K is a fair price if, in 6 months' time it might be "worth" £315K. But at the moment it's just as likely to have dropped in value. So why on earth would I pay that price? Can you understand my thinking?

Yes I can understand your thinking but you are one person. Just for your information, I am a director of a chain of 5 estate agents in the SE, and although I have to admit I don't work in them day to day, I of course have a good handle on the figures that come in.

Based on my experience, which Im sure you will agree is broader than that of one potential buyer, the trend if for properties valued close to £260 to stick on the market, those far over that, which 30,000 is, do not stick.

To speculate on whether the price is that of the vendor or the estate agent is rather strange when we do not know what the case is in this instance. But again, I can tell you that agents do value properties between £250K and £300K, as just in any other price range imaginable £50,000 represents a difference in either quality, size, location etc.

meanmachine_2

Thanks for that Lush.

But I know the games that EAs play. And I'm sure many properties are valued at 280K, rather than £260K, in the attempt to break through the stamp duty threshold. Why wouldn't they try this trick?

Doesn't mean I'm going to fall for it.

It's extraordinary, just like with the top rate of tax, that so many properties now fall into this 3% stamp duty rate. Another example of new labour's "fiscal drag". Disgraceful.