Rising property prices in London are encouraging owners to carry out large-scale improvements on their homes, rather than face the expense of moving home, according to skip hire broker Proskips.
Central London estate agent Plaza Estates says the many of the properties in ultra-exclusive Knightsbridge have been remodelled to create some of the most spacious apartments in London.
And in the more affordable outer suburbs countless numbers of property owners are bringing in builders to create loft conversions, rear extensions and garage conversions to their more modest homes in an effort to avoid moving.
But what if a new job or family commitments force you to move home? Here, Central London estate agent Kubie Gold explores the true financial cost of selling a property.
Estate agency fees
Choosing the right estate agent can make the difference between maximising the value of your home and not receiving a single offer.
The fee charged by a local high street estate agent will reflect the type of property you instruct the business to market but are typically no higher than 1.5% plus VAT of the sale price.
That charge should cover all the marketing of the property, including the production of high-quality colour brochures and floorplans, the services of a professional photographer, listing your home on national property websites, accompanied viewings and handling all offers for the property.
The average price of a property in London was £530,368 in February 2016, so expect to pay an average of £9594 in the capital.
Many online estate agents charge 0.5% but if their lack of local knowledge leads them to undervalue your property by just 1.5% the owner of an average value London home would lose £7955 of their house’s value and still pay the online agent £2612 in fees.
Energy Performance Certificate
It became a legal requirement for vendors to provide an Energy Performance Certificate free of charge to prospective buyers on 9 January 2013. A copy of the EPC must also be handed over to the eventual buyer.
The cost of an EPC can vary, but usually range between £100 and £150 (excluding VAT).
Any property seller will need to hire a solicitor or licensed conveyancer to oversee the legal aspects of a property sale. They either charge vendors a flat fee or a percentage of the value of the property.
As a rough guide, you can expect to pay between £1000 and £3000, depending on how complex the transaction is.
An indemnity policy is taken out to cover any defects in the title of the property being sold, such as a restrictive covenant or a missing document of title. Your solicitor may suggest you take out an indemnity policy, which will cover the purchaser’s costs if the defect becomes a problem.
The cost is worked out by insurers based on the value of the property and the nature of the risk involved. Typical premiums range from £250 to £500.
Capital Gains Tax
Although vendors do not pay Stamp Duty Land Tax when they sell a property, the government has ruled that Capital Gains Tax is payable if the property is not your primary residence and you make a profit from its sale. In other words, if the property is a second home, a buy-to-let investment or forms part of an inheritance.
Presenting your property in its best light to potential buyers can help clinch a successful sale.
Before putting a property on the market, it is advisable to carry out any minor repairs required, bring its decorative order up to scratch and clear unwanted furniture and other possessions to make rooms appear larger.
It is also wise to factor the fees charged by independent removal companies into the cost of selling your property and any costs charged by mortgage companies.