Over the last few years we have seen many changes in legislation when it comes to buying and selling property. Many have little or no direct effect to the homeowner or buyer but there are a few changes which are important to be aware of.
On 1 October 2013, the Property Misdescriptions Act 1991 (PMA), which previously made it a criminal offence for estate agents to make false or misleading statements about properties being offered for sale, was repealed. This has been replaced by Consumer Protection Regulation (CPR) and although CPRs have been in force for 5 years, they are still unfamiliar to many estate agents and consumers. In short estate agents are prohibited from engaging in commercial practices that are unfair to sellers, buyers, potential sellers or potential buyers of residential property.
Therefore, agents need to be extra careful about how they advertise properties for sale or lettings, and to make sure their particulars on properties are accurate. Describing properties as ‘stunning’, ‘desirable’ or in a ‘quiet area’ now need to have evidence to back up such statements. Furthermore, agents’ particulars which might have misleading omissions are also caught by the new Regulations. Whereas the previous PMA legislation left the onus on the buyer there is now a legal obligation for the seller or landlord to disclose any information which may affect a person’s decision to buy or let. Due to the lack of Case Law it is certainly open to interpretation on what those factors may be but our position is transparency and honesty all the way.
Another significant change coming into effect on April 1th 2016 is the increase in stamp duty to second home buyers. Guidelines are currently available as to what the changes may be and the policy will be outlined at the 2016 Budget on March 16th. Although at first glance some of our buyers have assumed this change would not affect them as they were buying the property for personal use and not rental, it is not just landlords that will be hit but anyone owning a second home.
This could be parents buying a property for their children or a couple purchasing a home together where one is already a homeowner. Like many of our clients, homeowners who want to buy another home before selling their current one will still be affected by the increased stamp duty, but a refund is available if the previous main residence is sold within 18 months.
The proposed higher rates will be 3% above the current residential rates, including the 0% band. For example, anyone buying a £200,000 second home or buy to let before April pays stamp duty of £1,500. This is based on paying 0% on the first £125,000 of the property value and 2% on the portion between £125,001 and £250,000. From April, buyers will have to pay 3% for the first £125,000 and 5% instead of 2% on the amount between £125,001 and £250,000. This gives them a total bill of £7,500.
If you are considering selling a property that is likely be sold as a second home it may be worth marketing now as buyers looking to invest will likely want to do so before the increase comes into play in April.
Should you want to discuss any of the above in more detail or any other property related matter we are always available to help you – simply contact your nearest office.