Author: JohnI

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Selling A House With Subsidence: How Easy Is It?

Selling A House With Subsidence: How Easy Is It?

In this article, we will break down what Subsidence is, what the signs are, what underpinning is and how easy it is to sell a house with Subsidence.

Tom Condon
Tom Condon ★ Digital Content Writer

Table of Contents

The United Kingdom’s coasts are rapidly eroding, causing many houses to fall victim to coastal erosion. As a result, the mere mention of Subsidence can send alarm bells ringing for homeowners and potential buyers alike. 

 

Whether you buy a cheap property on the coast, look to renovate it, and then realise the previous owners didn’t disclose a history of Subsidence or the ground has begun to erode while you have lived within the property, the thought of selling a house with Subsidence can be daunting.

 

But selling a house with Subsidence doesn’t have to be complicated. A property with Subsidence can be easily rectified as long as the underpinning is secure.

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What Is Subsidence?

Subsidence in a house refers to the downward movement or sinking of the ground beneath the structure, which can result in the shifting of the building’s foundations. 

 

Subsidence happens when the soil beneath a building is made up of a high percentage of clay and is, therefore, unable to support the structure’s weight. Clay expands in wet weather and reduces in warm weather, exaggerating the subsidence rate.

 

Subsidence is especially alarming when the ground is sinking at different rates and the property’s foundations become misaligned.

What Are The Signs Of Subsidence?

If you suspect that your property is at risk of Subsidence, then you should consult a structural engineer or building surveyor who can assess the situation; however, here are some common signs:

Look out for new or widening cracks in the walls, particularly those wider than 3mm or diagonal cracks that appear internally and externally. These cracks may be thicker at one end and taper as they move across the wall.

Cracks form around window and door frames, especially if they are diagonal or have a stepped pattern. These cracks may indicate that the building’s foundations are settling unevenly.

It could be a sign of Subsidence if doors and windows become difficult to open or close correctly. The frames may become misaligned as the building shifts or settles, causing doors and windows to stick.

Check for sloping or uneven floors, particularly on the ground floors. If the floor feels uneven or slopes noticeably in one direction, it could indicate that the foundation is moving.

Gaps or separation between walls, ceilings, or floors may indicate that Subsidence is causing different parts of the building to move independently, leading to visible holes or cracks at the junctions.

In severe cases of Subsidence, the entire building may exhibit signs of leaning or titling, which can be observed from the outside, where the structure appears visibly off-vertical.

What Is Historical Subsidence?

If your property has had Subsidence in the past, fear not! It is not impossible to sell your home; you must disclose the historical Subsidence to your estate agent. 

 

When you inform the estate agent, they will make sure all potential buyers are aware, be prepared that it may take longer to sell your home as Subsidence can be-off putting, even if historical. 

 

You will need to instruct a building surveyor to assess your property, and they will distinguish if your property has ongoing Subsidence or historical subsidence issues:

 

  • If your property has historical Subsidence, any continued movement is unlikely, and you will not have to make any further structural changes.
  • If your property has ongoing Subsidence, you must carry out structural changes to secure the property.

 

If the property has historic Subsidence, you will need to provide evidence of any past insurance claims and the specifications of renovations that have been used to improve the security of the structure, as well as present a Certificate of Structural Adequacy.

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What Is Underpinning A House?

Underpinning a house is a structural improvement technique used to strengthen and stabilise the foundation of a building. 

 

The process involves strengthening the existing foundation or constructing a new foundation beneath the existing one to provide additional support, enhance its load-bearing capacity and prevent further movement. 

 

Underpinning a house is usually the go-to method when structural engineers look to improve a home with Subsidence. 

 

Underpinning a house could cost anywhere from £8,000 to £30,000 or more for an average-sized home.

What Is The Process Of Underpinning A House?

A structural engineer or a specialist contractor will assess the existing foundation, soil conditions and any signs of foundation issues. 

 

They will conduct a detailed engineering analysis to determine the most suitable underpinning method and create a plan for the project. 

 

The area around the foundation is carefully excavated, usually in small sections, to provide access to the existing foundation. The depth of the excavation will depend on the specific underpinning method chosen and the desired stability.

 

Temporary supports, such as props or jacks, are installed to ensure the stability of the structure during the underpinning process. These supports bear the weight of the building while the foundation is being strengthened.

 

The Engineer will then implement the chosen underpinning technique, which could involve pouring mass concrete, constructing reinforced concrete beams, installing mini-piles or injecting grout. 

 

After the underpinning construction, the new foundation elements or materials need time to cure and settle. This period allows the foundation to gain strength and stability.

 

Once the underpinning has settled and achieved the desired strength, the excavated areas are backfilled with suitable materials. 

 

The soil is compacted in layers to ensure proper support and prevent future settlement. Any disrupted structures or finishes, such as flooring or walls, are reinstated. 

 

After the underpinning process is completed, ongoing monitoring must be conducted to ensure the foundation’s stability and the underpinning’s effectiveness, which may involve periodic inspections and measurements to track any changes.

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How Much Does Subsidence Devalue A Property?

Selling a house with a history of Subsidence can affect its property value as Subsidence is categorised as a structural issue and can raise serious concerns for potential buyers about the stability and condition of the property.

How Much Does Subsidence Devalue A Property?

If you go to sell your property on the open market, Subsidence means you take a hit of around 20% of your property’s value, as the future owner will spend around that trying to sort out the Subsidence. 

 

If your property were valued at £290,000, you would expect to receive offers of around £232,000. But this will vary depending on the severity of the Subsidence.

Does Subsidence Affect House Prices?

Yes, Subsidence will affect the house price when selling. If your property has ongoing Subsidence, you can expect to receive a 20-25% below-market-value offer, while historical Subsidence with no signs of resurgence may not affect the house price.

Does Underpinning Devalue Property?

Underpinning a house does not necessarily devalue a property; as it is often used to stabilise a property’s foundation and address subsidence issues, it may positively impact a property’s value by restoring its structural integrity.

 

However, it’s essential to consider that the perception of underpinning and the associated history of Subsidence can affect the perceived value of a property. 

 

Some potential buyers may view a property that has undergone underpinning as a potential risk or a cause for concern, impacting their willingness to pay the total market value. 

 

Four factors may impact how much you get for selling a house with Subsidence:

The quality of underpinning work is vital and must be completed by qualified professionals using appropriate techniques and materials that successfully resolve the subsidence issue. 

 

This can reassure potential buyers and help maintain or enhance the property’s value.

Proper documentation and guarantees for the underpinning work can help instil confidence in potential buyers. This includes providing information about the scope of work, warranties and insurance coverage.

The impact on property value can also be attributed to the local housing market conditions and buyer sentiment. 

 

The impact may be minor in areas like London or the South East, where subsidence issues are common, or buyers are more familiar with underpinning. 

 

However, the impact on property value may be more significant in markets where Subsidence is less prevalent, like Yorkshire.

It’s worth noting that underpinning a property may impact insurance coverage or premiums. Some insurance providers may require additional information, inspections, or specific policies for properties that have undergone underpinning.

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How Much Does Underpinning A House Cost?

The cost of underpinning a house will vary depending on the scope of work needed and the underpinning required. 

 

When you look for quotes, the scope of work, duration, property access and whether the Subsidence has caused aesthetic or structural issues will be considered.

 

The surveyor can suggest the best type of underpinning for your property. 

 

Piling is the most expensive type of underpinning, which is only used for deep foundations. But, mass concrete fill and beam, and Base are the most common ways to underpin a building. 

 

In terms of costs, the underpinning methods are:

 

  • Mass Concrete – £1,500 per m2
  • Beam And Base – £2,000 per m2
  • Piling – £2,600 per m2

 

But, you will also need to consider the costs for labour and services:

 

  • Structural Engineer – £70 per hour
  • Party Wall Engineer – £700 per neighbour
  • Building Control Application Fee – £200
  • Planning Permission – £33

What Impact Does Underpinning Have On A Mortgage?

If a property is underpinned, lenders will agree to a mortgage, but if the property is undergoing Subsidence, it may be challenging to get a mortgage.

 

Subsidence is seen as a high-risk structural issue, so it’s vital that you carry out any fixes as soon as possible. 

You may also get a mortgage on an underpinned house if you can secure home insurance. 

 

This is due to mortgages being dependent on the property being able to be insured.

Does House Insurance cover Subsidence?

Subsidence is covered by most house insurance, but only if the property has never had issues with Subsidence before. 

 

You may need to find a specialist insurance package if:

 

  • You wish to carry out any underpinning method.
  • The property is at risk of riverbank or coastal erosion. 
  • There is any damage to the land the property sits on. 

 

The insurance should cover all damage, the cost of reparations and any alternative accommodation. 

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Selling A House With Subsidence: The Process

Selling a house with Subsidence is similar to selling conventionally. However, you will need to ensure that you have the correct documentation and are as transparent as possible throughout the process.

 

Before you put your house on the market, you should have a building surveyor or structural Engineer assess the property to evaluate the subsidence issue and determine its cause and severity. 

 

The assessment will provide valuable information you must share with potential buyers and estate agents.

 

We recommend that you carry out any repairs or underpinning suggested before listing the property for sale as this will increase your chances of getting full market value & instil confidence in any potential buyers.

 

Transparency is vital when selling a house with Subsidence. You must disclose the subsidence history to potential buyers upfront. 

 

Providing accurate information about the subsidence issue, including the results from the survey, will help build trust and manage expectations. 

 

If you lie to the potential buyer and they request their survey, they may either pull out or give you a much lower off on the property.

 

When setting a realistic price for your property, you will need to consider the subsidence history and how well the underpinning has resolved the situation.

Selling A House With Subsidence: How Easy Is It?

Selling a house with Subsidence or underpinning can be a hassle, especially if it’s your first time selling up. But it doesn’t have to be!

 

Here at The Property Selling Company, we pride ourselves in creating an utterly hassle-free selling process, where we believe that selling a property should be three things; fast, effortless and free.

 

We can help sell your property in as little as 28 days while handling all aspects of the sale, including negotiating, surveys, and even covering all your legal fees. 

 

We offer you a complete online estate agency service because it’s our mission to change how you sell your house. We understand that underpinning can be a substantial upfront cost, so we won’t charge you any estate agent fees. 

 

We will work alongside you every step of the house sale, and our team of property experts will continue to be there even after the process is complete.

 

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What Is A Red Book Valuation?

What Is A Red Book Valuation?

Join us as we break down what a red book valuation is and why you would use one.

Tom Condon
Tom Condon ★ Digital Content Writer

Table of Contents

When it comes to assessing the value of your home, accuracy, transparency, and credibility are paramount. In the United Kingdom, one term that consistently emerges as the gold standard is the Red Book Valuation.

 

The comprehensive set of guidelines ensures that valuations are carried out consistently, transparently, and in compliance with professional standards. It is widely recognised and trusted by mortgage lenders, investors and professionals throughout the property industry.

 

In this article, we will delve into all things Red Book Valuation, exploring its purpose, the valuation process, and why it holds significant relevance in property transactions.

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What Is A Red Book Valuation?

A Red Book Valuation in the UK is a property valuation conducted in accordance with the Royal Institution of Chartered Surveyors (RICS) Valuation – Global Standards. These standards are commonly known as the Red Book due to the colour of their cover.

 

The RICS Red Book is a set of guidelines that outline the best practices for property valuations and provides consistent, transparent frameworks for valuers to follow when assessing a property. 

 

Red Book valuations will be carried out by a qualified chartered surveyor who has received training and is a member of RICS. This type of valuation is often required for various purposes, including property transactions, mortgages, financial reporting, taxation, and legal proceedings. 

 

As a homeowner selling your home, you may not directly need to commission a Red Book valuation yourself. 

 

But it may still be beneficial for you to be aware of Red Book valuations and how they work because they can help you set a realistic and competitive asking price for your property and have a stronger negotiating power later in the house selling process.

 

Most estate agents will handle the Red Book Valuation for you if it is necessary for your property, but not all will pay for it.

What Is The RICS Red Book Valuation Criteria?

The RICS Red Book valuation criteria covers everything from duty of care, to ethics, to the minimum content of a valuation report, to the valuer’s qualifications. 

The criteria also structures which of the five valuation methods the surveyor should adhere to, which will vary depending on the type of property. 

When Would You Need A Red Book Valuation?

Red Book valuations are needed any time you require a formal valuation for legal proceedings or tax purposes, which must be done by a RICS Registered Valuer.

 

 Some circumstances in which you will need a Red Book valuation include:

 

  • Tax planning purposes.
  • Calculating Capital Gains Tax or Inheritance tax.
  • Transferring assets into a Self-Invested Personal Pension (SIPP) Fund.
  • Any property being sold by a charity or that is probate.
  • Court proceedings, like during a divorce case.
  • Landlord rent reviews. 
  • Compulsory Purchase Orders (CPOs).
  • Shared ownership and social housing (Registered Prover) purchases. 
  • Disputed under resolution via mediation or arbitration.

 

Red Book valuations are only valid for three months, and must be renewed for a further three once lapsed if data is still recovered. 

How Much Does A Red Book Valuation Cost?

Red Book valuations in the UK can cost as little as £150, but as they are based on the property’s location, value and size, this can vary significantly.

 

At most, you could be looking at £1200, or more.

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What Is The Red Book Valuation Process?

By following the Red Book valuation standards, a RICS certified surveyor will:

Confirm the terms of engagement using an official letter and check for any conflict of interest regarding the valuation, as well as the sale or purchase of the property in question.

Next, they will check title and lease deeds and then inspect the property’s condition, confirming the size and property valuation.

They will inspect three comparable properties from the same area, which have been sold in the 6 months preceding the valuation.

Undertake a check on current and historic planning consents & permissions for the property as well as checking the rights of way, restrictive covenants, flood risks, chancel repair liability, land contamination and other mortgageability factors. 

Check the efficiency of utility services.

And, finally, calculate a suitable valuation and present these findings in an official report.

How Do You Arrange A Red Book Valuation?

To arrange a Red Book valuation, you should determine the purpose for which you require the valuation; whether it’s for a property transaction, mortgage financing, taxation or legal proceedings. 

 

Next, you should look for a qualified and experienced chartered surveyor who is a member of the Royal Institution of Chartered Surveyors (RICS). 

 

You can search for RICS surveyors on the RICS website, but you should ensure that the surveyor has experience with Red Book valuations. 

 

When instructing a surveyor, you should first request a quote from them which will vary in cost depending on the scope of your house. 

 

Once you agree on the terms, including the fee, timeframe and scale of the survey then you can schedule an appointment for the surveyor to inspect the property. 

 

On the agreed-upon date, the surveyor will visit the property and conduct a thorough inspection. You will need to make sure that the entire property is easily accessible, and remove any obstructions to doorways. 

 

After the property inspection, the surveyor will undertake the necessary research, analysis and valuation calculations to prepare the Red Book valuation report. Once it is ready, they will send you the report, and your estimated market value. 

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What’s The Difference Between Red Book & Market Valuations?

Red Book valuations ensure that the valuation process is conducted in a professional and consistent manner, with transparency and compliance with recognised industry standards. 

 

Market valuations on the other hand, refer to the broader practice of determining the market value of a property which can be conducted using various methods and different professionals including those who may not follow the specific guidelines of the Red Book.

Red Book Valuations

Red Book valuations refers specifically to any property valuation conducted in compliance with the RICS valuation – Global Standards (Red Book) which provides a set of guidelines and practices for valuers, ensuring consistency, transparency and professionalism.

 

The Red Book valuation is therefore far more accurate and unbiased than the Market Valuation. But, Red Book valuations do not factor in market conditions like supply and demand into the valuation. 

 

During a Red Book Valuation, the RICS surveyor must produce defined and justified valuation results.

Market Valuations

A Market Valuation on the other hand is a broader term that encompasses any valuation of a property’s market value, which could be done by an estate agent, chartered surveyors and independent property valuers.  

 

Market valuations refer to the process of determining the estimated worth of a property in the open market, considering factors such as supply and demand dynamics, recent comparable sales, location, condition and other relevant market factors.

When Do You Not Need A Red Book Valuation?

Although Red Book Valuations are preferred for their adherence to professional standards and recognition within the industry, there are a few situations where strict compliance with Red Book valuations is not necessary, such as:

 

  • Personal financial planning.
  • Simply curious. 
  • You only need a rough estimate of your property.
  • Non-market value assessments like property insurance surveys or assessments for specialised assets (solar panels).
  • Unregulated property transactions, like transfers between family or to a charity. 

 

However, it’s important to note that even if you don’t require a Red Book Valuation, you should still seek financial advice. 

 

You also don’t legally need to have a formal valuation in order to buy or sell a property, instead you could do an estate agent’s value appraisal. 

 

If you are looking to know your home’s valuation due to wanting to sell your home, then please fill out our sign up form and one of our property consultants will get in touch with you and provide you with any advice you require.

 

At The Property Selling Company, we can help you sell your house in as little as twenty eight says. We will take the hassle out of the house selling process for you, arrange all surveys, negotiate with buyers and handle conveyancing — while covering all costs usually associated with selling your house. 

 

That includes your RICS Red Book Valuation, if needed. Want to get started today? Click get offer below.

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Selling a House With a Mortgage

Couple discussing a mortgage with their mortgage lender.

Selling a House With a Mortgage

Looking at how to sell a house with a mortgage, the pros and cons of selling with a mortgage, and how we can help…

Alexandra Ventress

Alexandra Ventress ★ Digital Content Writer

Table of Contents

When it comes to selling your house, you can often be left with a lot of questions, especially when it comes to selling a property with a  mortgage. You can be left confused about your selling options, whether or not you should port your mortgage, and what the ups and downs of selling with a mortgage can be.

 

In this blog post, we will be looking at your options when it comes to selling a house with a mortgage, what porting your mortgage involves, and how you can sell your house with a mortgage in as little as 28 days…

 

Looking for a quick answer? Check out our interactive menu to the side. 

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Can I sell a house with a mortgage?

Of course! You can sell your home at any time as long as you can afford to pay off your remaining mortgage balance. Or alternatively, if you like you can transfer your existing mortgage to a new house. 

If you are planning to sell your property in order to free up some cash but not purchase another property straight away, then you should make sure that the sale price is higher than your existing mortgage. This should be including any fees that you have to pay, such as early repayment charges. 

Can I transfer my mortgage to another property?

Yes, you can! This process is referred to as porting and involves porting your current deal to a new property, rather than taking out a new mortgage. Porting a mortgage is a popular choice as it can often save homeowners a lot of money, especially if they are in the early repayment charges window or they have a favourable fixed rate. It also has the added advantage of being much less hassle than starting a new application with a different mortgage company.  

When should you port a mortgage?

The circumstances for when you should port a mortgage vary from person to person. But as a rule of thumb if one of the following criteria applies to you, then porting your mortgage may be an avenue you wish to explore: 

  • If you have had your property valued and it will not cover the mortgage debts, but you are comfortably paying off your mortgage payments each month. 
  • If you are comfortable with your current mortgage deal and don’t wish to make any changes 
  • If you are no longer in your mortgage initial deal term as you will no longer have to pay early repayment charges 
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How do you port your mortgage? 

In order to port your mortgage, you will need to fill out an application form. This is because you will not be transferring the deal itself, but the terms and conditions of the mortgage. As long as you are not decreasing or increasing the loan amount, you should not have to pay any fees for porting a mortgage. 

 

Whilst many mortgages are portable, it is worth bearing in mind that this is not the case every time. Your personal circumstances as well as the property itself will determine whether you are eligible for porting.  

What to consider before selling a house with a mortgage

When it comes to selling a house before you pay off the mortgage, there are a few elements you will need to consider before you put your current home on the market and buy another property. These include: 

  • Once you have sold your home, if the amount you get from the sale is not enough to pay off your mortgage, then you will need to continue making payments to your lender until you have repaid your mortgage in full. 
  • Until the property has been sold, you will be responsible for all mortgage repayments, insurance and other household costs. 
  • If you plan on redeeming your existing mortgage (paying back the full amount) and not buying a new property you must ensure that the sale price is more than what is left on your mortgage 
  • Once you have sold your home you will need to think about your personal financial situation. If you are out of employment at the time when you sell your house and you receive a cash lump sum from the sale of the property, then this can have an effect on whether or not you will receive your benefits. 
  • If you owe more money than your property is worth, then you are described as being in negative equity. If this applies to you, then you may need to think about other options other than selling, as it may not be a viable option for you. 
  • Once the sale is complete, your existing mortgage loan will need to be repaid by your solicitor or conveyancer. 

Additional costs for selling a house before the mortgage is paid 

Other costs that you should be wary of when selling your house with an existing mortgage include: 

An early repayment charge is a fee that you can incur when you wish to end your mortgage deal before the ‘official’ deal term ends.

 

An example of this would be if you were on a 3-year fixed rate deal with your lender but after 12 months you decided you wanted to move to a lower fixed-rate, you would end up facing an early repayment charge.

 

Because your lender expects to make a certain amount of interest by lending you the money for your mortgage, when you switch or pay off the debt early, they loose money. This is why you may end up facing an early repayment charge.

When it comes to selling your property with a morgage, you can expect your estate agent fees to range anywhere from 0.9% – 3.6%. This fee will depend on the agent you use, the property itself, and how sucessfully you negotiate. 

 

In the UK, if you sell with your average high street ‘no sale no fee’ agent, you can be facing fees of around 1.42%+VAT. This means if you have a property that is valued at £285,000, you can expect to add around £4,000 to your house selkling costs. 

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What are early repayment charges? 

Early repayment charges are a fee that you may incur if you wish to end your mortgage before the deal term has officially ended. They are charged as the lender expects to make a certain amount of interest by lending you the money for your mortgage on a fixed or tracker rate mortgage. If you decide to switch or pay the debt off early, they will lose money, which is why you are then facing an early repayment charge. 

 

If you are a homeowner who is paying their lender’s standard variable rate (SVR) then early repayment charges should not be a concern for you. 

Pros and cons of selling your house before your mortgage is paid off 

As with any house-selling situation, there are pros and cons to selling your property before the mortgage term is over. Below we take a look at some of the pros and cons of selling your property before the mortgage is paid off: 

Pros

  • If you have had a change of circumstances and your current property is no longer affordable, you may be able to get a more affordable mortgage on a cheaper property. 
  • If you have your property evaluated and it is high enough to cover your mortgage debt, then you will be able to pay off your debts. 
  • If you have found yourself in the position of falling behind on your mortgage payments, can stop the repossession of your property by selling it and then settling the mortgage debt.  
  • Once you have sold your property, you may be left with some spare cash to put towards your new property. 

Cons

  • When you sell your home, you may find yourself becoming homeless temporarily. 
  • If you cannot afford to pay your mortgage lender, then you may find yourself in a mortgage shortfall. This can be costly and stressful, and if you don’t make your payments, then you may end up facing legal action. 
  • If you purchase a new property, you will still be responsible for the mortgage payments on your old property until it is sold.
  • You can find yourself in the situation of having to secure a short sale with your bank. This means that your old home will be sold for less than you originally bought it for. 
  • If your property valuation comes back lower than expected then you won’t have enough to cover your original mortgage deal, which will make paying your remaining payments difficult. 
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Where can I sell my house with a mortgage?”

The majority of homeowners on the open market, unfortunately, do not have the borrowing power to be able to take out two mortgages at the same time. So if you find your dream house on the open market but yours is yet to sell, what can you do? When taking out a loan or porting your mortgage is not an option, how can you purchase your dream home? 

 

Thankfully, you have several options to ensure that you do not miss out on your house purchase. 

Property Auctions

Property auctions are becoming an increasingly popular method of selling properties. The seller agrees on a minimum reserve price that must be met for the property to sell.  The hope is that the minimum reserve price will be met and that potential buyers will keep bidding, raising the total profit. The main advantage of selling through this method is that auctions tend to attract serious buyers. As winning bids are legally binding once the gavel falls, the buyer cannot pull out without severe financial consequences. 

 

The downside to selling through a property auction is that they are not the swiftest selling option. Once you have listed your property for sale, you will have to wait for the next auction which could be weeks or months away. Even after the auction is complete, you will still need to wait for the paperwork to go through which can add an additional month or more to the process. Furthermore, selling at an auction is not without cost. Auctioneers, like estate agents, charge a commission to cover the costs of marketing and selling your home.

Bridging Loans

Another option for selling your home is taking out a bridging loan. These loans help to bridge the gap between buying and selling a property. They are usually short-term loans however they come with higher borrowing costs. 

The Property Selling Company 

Another way you can quickly sell your property in order to buy the home of your dreams is through an online estate agent like ourselves. 

 

Here at The Property Selling company, we believe that selling a house should be three things: fast, effortless, and free. That’s why we can sell your property in as little as 28 days, without the estate agent fees! 

 

We offer you a full online estate agent service – because it’s our mission to change the way you sell houses. Gone are the day of estate agent fees eating away at your total profit. 

 

We will be working alongside you every step of the house-selling process, covering everything, so you won’t have to. The days of expensive solicitor fees and legal work are over, and our team of property experts will continue to be there, even after the process is complete. 

 

We will market your property on popular property portals such as Rightmove and Zoopla, organise viewings, cover legal fees, and negotiate better deals all for free!  

 

If you are ready to sell your home in as little as 28 days, then get in touch today and fill out one of our fast, free, no-obligation forms for your house valuation today!

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Selling and Buying a House: Should I Sell First?

Selling and Buying a House: Should I Sell First?

Finding the best avenue to selling and buying a house can be confusing, join us as we delve into all the ways to sell and buy a house.

Tom Condon
Tom Condon ★ Digital Content Writer

Table of Contents

Selling and Buying a House: Should I Sell First?

Selling and buying a house could take anywhere from four to twelve months, and is completely reliant on the demand and supply of the housing market as well as any property chains you may be in. 

 

There is no set way to sell and buy a house, in fact there are so many different avenues, it can be very confusing! The right avenue to follow will simply come down to what suits your needs. 

 

When you buy a house, you will need to pay Capital Gains Tax, and when you sell a house, you will need to pay Stamp duty, on top of the actual house sale and any arrangement fees or estate agent fees so it’s vital you have your finances in order. 

 

There are disadvantages and advantages to selling first, buying first or doing it simultaneously. 

If you’re looking for something specific, please check our interactive menu below:

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Should You Buy And Sell A House At The Same Time?

Selling and buying a house simultaneously is the route that most homeowners in the UK choose. This is due to the ease and convenience of not having to rent in between houses. 

 

But, buying and selling a home at the same time can be a complex process as it requires careful planning and coordination to ensure a smooth transition between homes.

What Is The Process Of Selling And Buying Simultaneously?

Selling and buying simultaneously, is the most generic way to sell and buy a house. 

 

Before considering simultaneously buying and selling a house, you should assess your financial situation and determine if you have enough funds for a deposit on the new house and if you can qualify for a mortgage while carrying the existing mortgage. 

 

You should always look to evaluate current housing market conditions, as if your local area is a sellers market then you will be able to easily sell your house. 

 

But, if it’s a buyers market then it may take longer to sell your house, but easier to buy your next one — which could end up in you spending more money on utility bills or selling at below market value to a cash buyer or auction. 

 

Due to the risk involved in the selling and buying a house process, you should attempt to coordinate the timing of your transactions to minimise the gap between selling your house and purchasing a new one. This could involve aligning your completion dates and arranging temporary housing if needed.

Advantages Of Selling And Buying A House Simultaneously

When selling and buying a house simultaneously, you will benefit from convenience, where you can avoid the need to find rented accommodation or move twice, which can save time, effort and avoid emotional distress. 

Selling and buying simultaneously can help you align your financial transactions by using the proceeds from your current home and apply them directly toward the deposit or completion costs of buying your new home.

 

Simultaneous purchase and sale allows you time to transition between homes more efficiently. 

 

You should be able to coordinate completion dates which can be beneficial to have specific time constraints or need to synchronise with other life events, such as employment changes or accommodating the start of the new school year. 

 

Selling and buying a house at the same time will also allow you to work with the same conveyancing solicitors at the same time, and minimise the conveyancing costs. If you were to sell your house and buy separately, then there would be a gap between the two processes. 

Disadvantages Of Selling And Buying A House Simultaneously

Although coordinating the sale and purchase of two properties can allow you to have a seamless move, if it goes wrong, it could produce time uncertainties. 

 

Which can be challenging to ensure that the completion dates align perfectly and any unexpected delays in one transaction can have a ripple effect especially if there are any property chains. 

 

The simultaneous transaction could create financial strain if you need to cover two mortgages or carry the costs of both properties for an extended period. It’s essential to carefully assess your financial situation.

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Should You Sell First And Then Buy?

If you have the time, or accommodation to stay in during the selling and buying a house process, then selling first and buying second may be the best option.

 

By selling first, you will have the funds readily available to buy your next property and be a more attractive buyer but you will need to rent or stay elsewhere in between houses.

What Is The Process Of Selling First And Buying Second?

When selling first and then buying a house, you should ensure that you have all your finances in order before you start the process of selling your house.

 

By staying organised, you will be able to organise and port your mortgage quickly, and ultimately make you far more attractive to the property seller. This will help avoid delays and the risk of you being gazundered. 

 

Before you sell your house, you should have already completed your research to find your next property and contacted local estate agents about houses you are interested in.

 

Once you have sold your house, you can actively view the properties and decide on a property that suits you.

 

You may need to move to a friend or relative’s property, or rent, while you find your next home, which may come at an additional cost.

Advantages Of Selling First

When selling first and then buying a house, you should ensure that you have all your finances in order before you start the process of selling your house.

 

By staying organised, you will be able to organise and port your mortgage quickly, and ultimately make you far more attractive to the property seller. This will help avoid delays and the risk of you being gazundered. 

 

Before you sell your house, you should have already completed your research to find your next property and contacted local estate agents about houses you are interested in.

 

Once you have sold your house, you can actively view the properties and decide on a property that suits you.

 

You may need to move to a friend or relative’s property, or rent, while you find your next home, which may come at an additional cost.

Disadvantages Of Selling First

Due to market conditions, you may find it hard to find a property to buy after selling yours, which means you will spend more money on finding further accommodation to rent. 

 

There is also the chance that house prices rise dramatically when searching for your next property, which may result in you ending up out of pocket. 

 

If you sell your house before buying a new one, you will need to find temporary housing arrangements which could involve renting a short-term apartment, staying with family or friends. 

 

You will also need to arrange storage for your belongings as well which can be expensive.

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Should You Buy First And Then Sell?

If you are selling and buying a house and want to buy first, then you’ll need to be able to fully fund the purchase of the new property before having the funds released from your house sale. 

 

This is one of the most risk heavy ways to sell a house but could have a massive pay-off.

What Is The Process Of Buying First And Then Selling?

When buying a house first and then selling your house, you will need to create a budget for purchasing the new home and ensure that you have the financial means to carry the mortgage of your old house and a new mortgage for the new house. 

 

When buying first and then selling your house you should begin by searching for a new home based on your preferences, needs and budget. You should engage with an estate agent to assist you in finding the right property, schedule viewings and negotiate offers.

 

Once you’ve identified a property you wish to purchase, work with a mortgage lender to obtain pre-approval or secure financing for your new home. 

 

When you submit an offer to the seller of the new property, you should negotiate the price, and completion dates before the offer has been accepted. Carry out any necessary surveys and work alongside your estate agent and solicitor to complete the necessary paperwork.

 

Once the purchase of your new home is underway, you can focus on preparing your current home for sale, including staging your home, making necessary repairs, and consider hiring an estate agent to list your property. 

 

Working closely with your estate agent, mortgage lenders and solicitors to coordinate the completion dates for both the purchase of your new home and the sale of your current one. Ensure there is alignment and sufficient time to complete necessary surveys.

Advantages Of Buying First

When selling and buying a house, buying first allows you the luxury of time to carefully consider your options and make a well-informed decision. 

 

You can thoroughly research the market, explore different options and find a home that truly meets your needs and preferences without the pressure of a pending sale. 

 

When you buy a house first, you eliminate the need to rent or arrange temporary housing arrangements. You won’t have to incur the costs of renting which can save you money and make the moving home process more convenient. 

 

Being a non-contingent buyer can provide you with a stronger negotiating position when making an offer on a new home. Sellers may view your offer more favourably since its not contingent on the sale of your current home. 

Owning a new home before selling your current property allows you flexibility in the timing of sale. You can choose the optimal time to list and sell your home, potentially allowing you to wait for market conditions to be more favourable.

Disadvantages Of Buying First

Buying a new home before selling your current one means carrying two mortgages simultaneously which can create financial burdens and increase your risk exposure. 

 

You will need to have sufficient financial resources to cover both mortgages, utility bills, insurance and other costs until your current home is sold.

 

If your current home takes longer to sell than anticipated, it can strain your finances and increase your monthly obligations. 

 

The housing market is subject to fluctuations and can be unpredictable; buying a house first exposes you to the risk of potential market downturns or a decline in home prices. If the value of the property decreases before you sell it, you may face challenges in selling it at the desired price. 

 

Buying a house before selling may limit your budget and purchasing power for the new home. If a significant portion of your funds is tied up in your current home, you may have less money available for a deposit and any necessary renovations or improvements on the new property.

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Selling And Buying A House? This Is How You Do It

If you are selling and buying a house, we can help!

 

We can offer you a full online estate agent service, without all the estate agent fees because its our mission to change the way you sell houses. We will work alongside you every step of the house selling and house buying process, covering everything so you don’t have to.

 

The days of expensive solicitor fees and legal work are over, and our team of property experts will be there to support you even after the process is complete!

 

We will market your property on popular property portals such as Rightmove and Zoopla, organise viewings, cover legal fees and negotiate better deals all for free.

 

If you are ready to sell your home in 28 days, then get in touch today and fill out one of our fast, free, no-obligation forms for your house valuation today.

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Selling And Buying A House FAQs

When selling and buying a house, you will find it easier to get approved for a mortgage if you have a property in your sights that you wish to buy. Which is why selling and buying a house simultaneously or buying and then selling may be the least stressful. 

 

If you decide to sell your house and then buy, you will be under stress to get approved for a mortgage while living in temporary housing.

When you are selling and buying a house, you should assess your financial situation, research and find a home, take your time, wait until the market favours your situation and take the big leap!

Selling a house to a first time buyer can have both advantages and disadvantages as they are eager and motivated to get onto the property ladder, they are often less complicated as there are no chains, but the first-time buyers may fail in securing financing due to a limited credit history or the house sale may fall through due to inexperience.

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Can I Sell My House Fast For Market Value?

Can I Sell My House Fast For Market Value?

Looking at how you can sell your house fast for market value, tips to help you secure a quick house sale, and how you can avoid hefty legal fees.

Alexandra Ventress

Alexandra Ventress ★ Digital Content Writer

Table of Contents

It’s no secret that when it comes to putting your home on the open market, getting the quickest sale for the best price possible is every seller’s end goal. But is it possible? 

 

In this blog post, we will be looking at how to work out the market value of your property, wheat factors can affect market value, and answering the all-important question “can I sell my house fast for market value?”

How do I work out my market value?

When it comes to selling your property, knowing how much it is worth is one of the key parts of the journey. It lets you know how much your property is worth, how much you can make in the sale, and if you are buying another property, how much your budget will be. 

 

So, it is only natural to want to know how you can work out the market value of your property. 

 

There are plenty of free online valuation tools out there, that pull local market data, as well as the size, location, and condition of your property and can give you a rough valuation of your home. These are a good way of getting a rough idea of how much your property may be worth, but the real figure may be just more than or slightly less than this.

 

You can also invite three local estate agents round to your property to provide an in-person valuation. Although you may not hire them to sell your property, many estate agents will provide a free valuation so it is worth seeing if any in your area do. It is a good idea to get three different valuations as you will be able to get an average price from them. 

 

It is also worth conducting your own market research into the area to find your own figures. Zoopla releases a house price index which will allow you to look at housing prices across the country to give you a rough idea of what to expect. Property portals such as Rightmove and Zoopla are also good for seeing how much similar houses in your area have sold for, which will also give you an indication of market value. 

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What factors will affect the value of my house?

There are many reasons why your house may or may not achieve full market value when you put it up for sale. Below we explore some of the factors that your sale price: 

Location

When it comes to property, what are the three magic words that everyone knows? 

 

That’s right, it’s location, location, location! 

 

And as important as it is when you are buying a house, it is equally as important when you’re selling. Whilst each area across the UK will have different house prices, as a rule of thumb the North of England has cheaper property prices than the South. However, how much value your property holds will also depend on your whereabouts in the county you are as well. If your area has great schools, transport links, and lots of amenities, then it is likely to be valued higher than the areas which don’t. 

Condition

It’s no secret that a property that is in good condition will sell for more than a property that is not. Should a survey reveal any information about the property that is unfavourable, then the value will certainly drop as buyers will not pay more for a property that needs work doing. 

Flood Risk

Unfortunately, if you live in an area that has had severe flooding in the last three years or is located in a high-risk flood area, then its market value will be negatively affected for the next three years. 

Property market

One of the biggest factors when it comes to achieving market value for your property is the condition of the market when you put it on to sell. The open market is like an ecosystem, if there are lots of buyers and not many sellers, then your value will go up, however, if there are lots of sellers and not many buyers then your value is likely to go down. 

 

Before putting your home on the open market it is always wiser to check the conditions so you have the best idea about potential sale prices as possible. 

Parking

Off-street parking is a surprising factor that can affect your house sale value for the better. With more and more households owning more than one car, off-street parking is a huge bonus. According to data from the House Buyer Bureau, it can add as much as 20% in some areas, 

Value addition

Potential to add value is a vague term that is thrown around a lot by estate agents. It means that your property has areas where features could potentially be added to boost the value of your property. Examples of this would be a large garden where an extension could be added or converting an attic into an extra bedroom. If you have had planning permission approved in the past, this can be particularly attractive to potential buyers. 

Presentation

First impressions matter! The general presentation of your property during house viewings can have a massive effect on your home. If your home is neat and tidy, inside and out, then you will find that this is often reflected in the house valuations you receive in return. 

Bedrooms

Another good rule of thumb when it comes to the market value of your home is the more bedrooms it has, the more value it will be worth. If you sacrifice a bedroom to use as a home office or gym, you may find that you get a lower valuation. 

What documents do I need to help my house sell quickly?

One of the best ways you can help to complete the sale quicker is by having all of your key documentation to hand. This will ensure delays are avoided to the best of your ability and can keep the sale progressing. Below we have a list of all of the key documentation you may need to hand in order to sell: 

 

  • HM Land Registry title documents 
  • Subsidence guarantees or warranties 
  • Documents proving you have had all necessary gas checks prior to selling
  • Party wall agreements (if needed)
  • Planning permission
  • FENSA or CERTAS certificates for windows
  • Electrical checks
  • Building regulation completion certificates and builder’s guarantee certificates (for alterations and additions)
  • Damp guarantees/warranties

Tips to help sell house fast

If you are looking to sell your house fast for full market value, it is important to consider the steps you can take to help achieve that all-important quick sale. One of the areas of your home that can have the most effect is staging your home.

 

Staging refers to setting up your home in a certain way, so that it is more appealing to buyers. Whilst it may not sound like a big deal, according to research from Homesandgardens.com, a home that has been staged will sell three times faster than a house that has not been staged. The same research also revealed that 70% of estate agents stated that staging your home can help to increase the offer value on a house by up to 10%.

One of the most cost-effective ways you can get your property ready for the house sale process and secure the price you want is with a deep clean. Whilst it may sound obvious, clean houses get better valuations than those that are not. The best way to ensure that you perform an efficient deep clean is to tackle your home room by room, leaving no sofa cushion unturned or surface unwiped. 

 

Whilst it can work out to be a little more costly, don’t underestimate the power of professional cleaning on items like curtains and carpets.

Another aspect you should consider when preparing your house for a quick sale is decluttering. This goes hand in hand with our previous point and is not only a good way to achieve a fast sale and full market value, but it will also make moving easier. By deciding as you are deep cleaning which items you wish to keep in the move and which you shall put in storage or throw away, you will end up not taking as much with you when you move out. 

Another key to getting full market value for your property is making sure any unfinished DIY jobs and repairs are finished and taken care of. Potential property buyers are not going to pay full market value for a property that requires extra work doing to it. Your potential home buyers are likely to lower their asking price each time they see a fault that needs fixing. 

If you need to sell fast, then an element you can not afford to forget about when preparing for a house sale is kerb appeal. First impressions matter, so before you put your home on the open market, you’ll have to find time to dust off the gardening gloves. According to data from a survey done by HomeOwners Alliance, 68% of potential buyers considered kerb appeal to be an important factor when choosing their next home. 

 

Whilst tackling the garden can feel like a mammoth task, there’s no need to go full gardeners world on it. Small changes such as planting new flowers, painting a fresh coat of paint onto your fences, cutting the grass, and cleaning your patio! 

Whilst it may sound scary, an important part of home staging is ensuring that the property is neutralised. In order to neutralise your property, you simply need to remove any personal items from your home. This helps to give the property the same look that a showhome has, it turns it into a blank canvas where potential buyers can truly imagine themselves living. 

 

Items that can be easily forgotten about when neutralising your home in preparation for home viewings include: 

 

  • Family photos
  • Holiday souvenirs
  • Children’s artwork
  • Collectable items
  • Trophies and certificates

 

Show homes sell so well because they allow people to truly envision themselves living there, so when it comes to preparing your home for viewing, you should aim for a similar look for your property. 

If you want to sell quickly, there is one tip that you need to remember.

 

First. Impressions. Matter. 

 

If your home is looking tired, dull, and like it has seen better days, the chances are your potential property buyers are going to be put off by this. Just because your house is feeling tired, doesn’t mean you have to pay a fortune on a facelift. There are plenty of low-budget ways you can help to freshen up your home. Painting any walls that are looking past it is a great way to make any room look brand new. 

 

You don’t just have to freshen up your rooms in the physical sense, smells also play a big part in getting full market value for your property. The following smells and odours can put buyers off if they are present during viewings: 

 

  • Cooking
  • Bins
  • Blocked drains 
  • Damp 
  • Pets
  • Smoking 

 

Before having any potential buyers round for viewings, it is a good idea to invest in a couple of scented candles, reed diffusers, or room sprays to keep your home smelling fresh. 

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Options for selling your house quickly

When it comes to selling your house quickly, you have three main options. You can sell through a property auction, a cash buying company, or through an online estate agency, like ourselves. As with any method of selling, each of these sale routes comes with pros and cons, which we have broken down below: 

Property Auction

If you are looking to sell a property for full market value then a auction property sale may be a route you wish to explore. Whilst not necessarily known for providing you with a fast sale, property auctions can connect you with serious buyers. This is because once the hammer goes down on a bid at a property auction, the deal is legally binding. That means buyers are often sure of the property they are purchasing and will be unable to pull out without serious financial penalties.  

 

An auction property sale works by sellers agreeing on a minimum reserve price for your property, and if a buyer meets the reserve price then it sells to them.

 

A best-case auction scenario is that multiple buyers are interested in the property and will be outbidding each other, raising your total profit and allowing you to get slightly more than your market value. 

However, as we have already mentioned, a property auction is not always the best route if you are looking for a fast house sale. The main issue is that auctions involve a lot of waiting. There are marketing, viewing, and valuations involved in the selling process and these can take up to a month to complete before the auction date even rolls around. And if it is a month with particularly high interest, you may find yourself having to wait for the next month to roll around before you can sell, adding further time to your wait. 

 

After the auction is completed and the hammer has fallen, you will still have to wait a month for the paperwork to go through, which adds more time to what is already a lengthy process. 

 

On top of this, selling at an auction is not without cost. Auctioneers charge fees to cover the cost of marketing and selling your home which can once again eat away at your final profit and take away from your market value.

Cash Buying Company

Fast property buying companies offer a great alternative to putting your property on the open market. They specialise in fast home sales and will often buy any house in any location. They will usually offer you a free cash offer and can buy your property in a timescale that suits you, whether that’s months or days away. 

 

A cash sale from a home buying company is one of the best ways to get a guaranteed sale in a timescale that suits you. The way most quick house sale companies work is the seller will fill in their postcode online and get a rough valuation of their property. They will then be called by an agent at the company who will be able to give them a more concrete offer. An in-person valuation is conducted to confirm the price and then the house is sold within the agreed timeline. 

 

A genuine cash buyer will have the cash fund readily available without needing a loan or mortgage to be able to purchase your property. 

 

Before you accept that cash offer, it is a good idea to make sure that the cash buyer you are selling with is registered with at least one regulatory board, such as the National Association of Property Buyers or The Property Ombudsman. This will ensure that you are selling with the best of the best and offers extra security to you as the seller. 

 

However, if full market value is what you’re after, then a cash buyer may not be the route for you. Cash house buyers will buy your house at below market value in return for offering you a quick and hassle-free sale.   Each cash buyer is different, though as a rule of thumb, most companies will take around 10-20% below. 

Online Estate Agents

Another route you can take in order to secure a quick sale for full market value is online estate agents. An online estate agent will be able to sell your property for as close to full market value as possible, as well as taking the stress of selling out of your hands. 

 

An online estate agent will be able to offer you support throughout the house-selling journey, as well as marketing the property, organising viewings, and helping you with negotiations. And if you are looking for a fast sale, there are even companies that can help get you sold in as little as 28 days! 

 

Now you have heard all your main selling options, you still find yourself wondering “can I sell my house fast for market value?” Well, look no further as we have the answer that you are looking for! 

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How can I sell my house fast for market value?

Here at The Property Selling company, we believe that selling a house should be three things: fast, effortless, and free.

 

We offer you a full online estate agent service, without the fees – because it’s our mission to change the way you sell houses. Gone are the day of estate agent fees eating away at your total profit. 

 

We will be working alongside you every step of the house-selling process, covering everything, so you won’t have to. The days of expensive solicitor fees and legal work are over, and our team of property experts will continue to be there, even after the process is complete.

 

We will market your property on popular property portals such as Rightmove and Zoopla, organise viewings, cover legal fees, and negotiate better deals all for free! 

 

If you are ready to sell your home in as little as 28 days, then get in touch today and fill out one of our fast, free, no-obligation forms for your house valuation today!

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Do You Pay Capital Gains Tax When Selling Property?

Do You Pay Capital Gains Tax When Selling Property?

Looking to sell your property but don’t know what taxes you need to pay? Find out more here!

Tom Condon
Tom Condon ★ Digital Content Writer

Table of Contents

What Is Capital Gains Tax When Selling Property?

Capital Gains Tax (CGT) is the tax you pay when you gift or sell an asset. If you sell a property for more than you paid, you may be subject to CGT on the capital gains. 

 

The current CGT rate for individuals in the UK is 20% for basic rate taxpayers and 28% for higher and additional rate taxpayers. 

 

However, there is an annual tax-free allowance known as the annual exempt amount that allows you to generate a certain amount of capital gains tax-free each year. 

 

If you are a UK citizen and sell a property that’s your main residence, you may be able to qualify for Private Residence Relief (PRR), which can reduce or eliminate the capital gains tax owed. PRR is not available for estates used exclusively for business or rental properties.

 

If you sell a property that is not your primary residence, you must pay CGT on any capital gains made. 

You can reduce the tax owed by claiming certain expenses and allowances, such as costs associated with buying or selling the property or improvements made to the property. 

 

You can defer the payment of CGT by reinvesting the proceeds from property sales into another qualifying asset. 

It is essential to keep accurate records of the purchase and sale of your property and any expenses incurred to calculate the capital gain and any applicable taxes owed accurately. 

 

It is advisable to consult an accountant or financial advisor to understand the specific capital gains tax laws and regulations in the UK to determine the best course of action for your situation.

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When Do You Pay Capital Gains Tax?

You will pay Capital Gains Tax (CGT) when you sell an asset that has elevated in value since you bought it. Usually, when you sell your primary residence, you won’t have to pay any CGT due to private residence relief.

 

However, you’ll usually need to pay Capital Gains Tax on a property if you’re selling a second home or buy-to-let property.

When Do You Have To Pay CGT On Your UK Home?

Although in most cases you don’t have to pay CGT on your primary residence, there are some cases where you will:

 

  • The property includes 5000 square metres or more (this includes open land).
  • Part of the property has been sub-let (lodgers don’t count).
  • Part of the property is exclusively a business premise.
  • The property was bought to make capital gains. 
  • The property is not considered to be your primary residence. 

 

However, many of these can often be open to dispute or interpretation; if you need help, you should seek the advice of financial advisors.

Do You Pay Tax On Second Homes And Buy To Let Properties?

When you sell a second home or buy-to-let properties, you’ll be subject to Capital Gains Tax. 

 

If you own two or more properties, you can nominate the more valuable property as your primary residence to avoid paying Capital Gains Tax. 

 

However, if HM Revenue & Customs (HMRC) determines that a property isn’t your main home, you will have to pay Capital Gains Tax on any earnings in its value above your CGT allowance when selling a second home.

Do You Pay Tax If You Are Buying And Selling At The Same Time?

Although you will need to pay CGT, you will not need to pay Stamp Duty. You only need to pay Stamp Duty on a property if you purchase one after selling.

 

If you are buying and selling simultaneously, you will need to factor Stamp Duty into the transaction as it is based on the home value — and can end up being thousands of pounds.

 

However, not all properties will be subject to stamp duty. Stamp Duty usually applies to property purchases over £300,000 for first-time buyers or £125,000 for home-buyers.

Do You Need To Pay CGT On Inherited Or Gifted Property?

If you give a property to a civil partner, spouse or charity, you won’t have to pay Capital Gains Tax. 

 

If you have inherited a property and the estate has paid the inheritance tax, you won’t have to pay any further tax to pay unless you sell the property. The capital gain will be measured from the date you acquired the property.

What Is The Capital Gains Tax Allowance?

All taxpayers in the UK legally have a yearlong capital gains tax allowance, allowing you to earn a certain amount tax-free. You only have to pay CGT on capital gains that exceed your annual budget. 

 

In the tax year 2023-24, this allowance has decreased by 50% from its 2022/23 threshold of £12,300 to £6,000. 

 

Anyone who gains assets over £6,000 annually must pay CGT on the excess amount at their tax rate. You cannot carry over CGT into the next year; you’ll lose it if you don’t use it. 

 

Couples are treated as individuals, not partnered entities, so that each individual can earn up to £6,000 each on the property.

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How Do You Calculate Your Capital Gains Tax Bill?

To calculate your Capital Gains Tax Bill, you will need to determine the profit you made from the sale of your property, deduct any expenses, determine the amount of available Relief, calculate the taxable gain, apply the Capital Gains Tax Rate and pay any tax owed. 

 

To determine the profit you made from the sale of your property, you need to subtract the original price of the property from the sale price, which will give you the total gain made from the sale. 

 

If the property was your main home for all or part of the time you owned it, you may be eligible for PRR, which can reduce or eliminate your Capital Gains Tax owed. You may also claim Letting Relief if you rented out part of the property when you owned it. 

 

To calculate your taxable gain, subtract any allowable expenses and reliefs from the total profit made from the sale. Then you will need to apply the Capital Gains Tax rate. 

 

If you owe any Capital Gains Tax, you must report it on your self-assessment tax return and pay the tax owed by the deadline.

What Are The Requirements For Private Residence Relief?

If you meet all the eligibility requirements, you will be able to acquire a tax relief known as Private Residence Relief which covers the Capital Gains Tax. If some but not all requirements fit your property, then you will spend some tax. 

 

The eligibility requirements for Private Residence Relief include the following:

 

  • You have one home, and you’ve listed it as your main residence for all the time you’ve owned it.
  • You have not let part of it out. 
  • You have not used part of your home exclusively for business purposes. 
  • The grounds, including all buildings, are less than 5,000 square metres. 
  • You did not buy it to make a gain.

What Are The Capital Gains Tax Rates On Property?

You may face tax liability if none or only some of the Private Residence Relief requirements are met.

 

If you are an additional or higher rate taxpayer, you must pay either 28% on your gains from residential property or 20% from other chargeable assets. 

 

If you’re a lower rate taxpayer, the percentage you pay hinges on the size of your earnings, your taxable income and whether your growth is from residential property or other assets. To calculate this, you should:

 

  • Work out how much taxable income you have – your income minus your Allowance and any other Income Tax Reliefs you’re entitled to.
  • Work out your total taxable gains.
  • Deduct your tax-free income from your total taxable gains.
  • Add this amount to your taxable income.
  • If this value is within the lower Income Tax Band, you’ll pay 10% on your earnings (or 18% on residential dwellings). You’ll pay 20% (or 28% on residential dwellings) on any quantity above the lower tax rate.

 

If you are a trustee, business or personal representative of someone who’s died, you will pay 28% on residential dwellings and 20% on other liable assets. You’ll pay 10% if you’re a lone trader or partnership, and your earnings qualify for Business Asset Disposal Relief.

How Can You Reduce Your CGT Bill?

Capital Gains Tax on a property is charged on capital gains rather than the sale price. There are a few ways to reduce your Capital Gains Tax Bill, but we would always recommend that you seek a financial advisor to aid you:

 

Deducting Costs

 

Deducting costs when working out your CGT bill, including estate agent fees, selling costs, Stamp Duty incurred when purchasing the property and conveyancing fees. 

 

Deducing costs of improving assets, such as paying for a bathroom renovation, can also be considered when working out your taxable gain. 

 

However, you cannot deduct costs involved in the upkeep of the property, like interest on a loan to buy the property. 

 

Offsetting Losses

 

You can offset losses you’ve made when selling other assets; for example, if you own multiple properties and cause a loss of £25,000 when selling one of them, you can use that against the gains you make when selling another property and reduce your overall CGT bill. 

 

Joint Ownership

 

You can consider joint ownership with your spouse or civil partner, as everyone has a Capital Gains Tax allowance, so if you are the lone owner of a property, you can double your allowance by sharing ownership with your partner. 

 

If your spouse is in a lower-rated tax bracket than you, you could transfer all or part of the property into their name, as this will reduce your Capital Gains Tax Bill.

 

Timing

 

If you have used some or all of your Capital Gains Tax allowance for a particular year, you should consider delaying the sale of your property to the next tax year — remember that the allowance does not transfer over tax years. 

 

Main Property

 

If you have multiple properties, you can nominate the property you wish to sell as your main residence to reduce or eliminate the Capital Gains Tax Bill on that property. 

 

Letting Relief

 

If you have lived in the property at the same time as letting it out to tenants, you may be eligible for Letting Relief which may reduce your CGT Bill.

Capital Gains Tax FAQs

When you sell your property, you’ll have to pay Capital Gains Tax on most sales of UK property within two months (60 days). If the property belonged to someone who has recently died, you must include this information in the report to HMRC. 

 

You can report the Capital Gains Tax to HMRC by using HMRC’s online Capital Gains Tax Service, but first, you will need to calculate your capital gains.

The average cost to sell a house in the UK will vary depending on current market trends, however in 2022, the average cost was £10,401. This is due to estate agent & conveyancing fees, EPC & removal company costs, Mortgage exit fees, Early Mortgage Repayment charges, CGT and porting a mortgage.

You do not need to pay Capital Gains Tax on your primary residence (somewhere you have lived for two years or more), as PPR covers this. You may be able to transfer property to your primary home or your spouse in a lower tax bracket — but please check this with a financial adviser.

Any profit from selling a home will be added to your taxable income or salary, but these will be added if you are eligible for any allowances or tax reliefs.

Usually, when selling your main residence, you will not need to pay the two main taxes; Capital Gains Tax and Stamp Duty. PRR will cover Capital Gains Tax, but Stamp Duty is only for property buyers. 

 

However, if you are selling your property and then buying an onward property, you will pay Stamp Duty on that property.

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