The Daily Telegraph - Saturday - Money
Super-rich tricks for a speedy sale
Wealthy buyers are fast-tracking purchases to beat the stamp duty deadline. Marianna Hunt finds out how
If you’re buying a £ 5m home, a £ 15,000 saving on stamp duty may sound like peanuts. But many super- rich buyers are keen to push sales through before the stamp duty holiday ends – and are willing to use any means at their disposal to do it.
Jess Simpson, of the eponymous buying agency, said: “They still put a high value on looking after the pennies. They just look at the saving in a different context, such as helping to pay for a new swimming pool or other luxuries such as artworks.”
Until March 31 home buyers benefit from a tax cut that means they pay no stamp duty on the first £500,000 of the house price, saving up to £15,000.
Those who buy a property that includes multiple dwellings can make even bigger savings.
In this case, the value of the property is divided equally among the dwellings and stamp duty is charged individually on each of them, with a minimum rate of 1pc.
“One couple bought a large country estate with six cottages and saved more than £100,000 thanks to the holiday,” said Ms Simpson.
These wealthy buyers may also be part of a chain, with others further down threatening to pull out if they do not complete before the tax break ends. Clare Coode of Stacks Property Search, another buying agent, said: “Some are pushing things forward in order to beat the deadline, but for others it’s just because they’re used to having things done instantly.”
It is possible to turn a deal around in just 24 hours if you have the cash, she added. Here are the tactics used by wealthy buyers in a hurry.
USE AN AUCTION HOUSE Roger Lake of Auction House, a property auctioneer, said interest in selling via online auctions had spiked during the pandemic, particularly among owners of high- value properties. “Our average selling price has increased significantly,” he added.
Ston Easton
£9.5m
PRICE AGENT Strutt & Parker
Selling at auction tends to be much quicker than going down the traditional route, which can take six months or more from listing to completion. “When the hammer falls you exchange and then you have an extra 28 days to complete – so you can go to auction in February and still benefit from the holiday,” said Mr Lake.
Bespoke auctions are becoming more popular as a way to speed things up by avoiding a wait for a general auction.
HAVE PLENTY OF CASH ON HAND Buying in cash speeds up the process because you are not required to get a survey, unlike with most mortgages. Andrew Weir of London Central Portfolio, an investment adviser, said: “That can take multiple weeks. Cash purchases avoid this.” It also makes you more appealing to a vendor, who can avoid lengthy chains.
“Super-rich buyers are incentivising their solicitors by paying a higher fee to fast-track their purchase,” Mr Weir said.
The ultra-wealthy are more likely to have a network of lawyers who are already on call to process the transaction quickly.
DON’T GET CAUGHT IN A CHAIN “Some clients want to remove the dreaded chain by looking at completing and renting the house back to the seller if they need longer to find somewhere,” said Ms Simpson.
However, this can be highly problematic if the property is mortgaged, as lenders would not approve of such an arrangement, she added.
SKIP LOCAL AUTHORITY SEARCHES Local authorities are struggling to cope with the surging demand from buyers for property searches. “One way to avoid the wait is to buy indemnity insurance instead,” said Ms Coode.
This protects buyers in case an issue arises that affects the property’s value
‘The money saved is being used to help pay for a new swimming pool or artworks’
after completion and should cover the shortfall in its price. It can cost as little as a few hundred pounds, but some issues will be excluded and many lenders will not accept it as an alternative.
Some buyers who are desperate to speed up the process, and avoid the current backlog, have used surveyors who are not accredited by the Royal Institution of Chartered Surveyors. A non- certified surveyor will not necessarily be less qualified, but buyers should first research their work to check they are suitable.
USE A PRIVATE BANK High street lenders have been inundated with demand from borrowers since the stamp duty holiday was announced.
“Even before this, it was generally much faster to go to a private bank for your mortgage, and the difference is even clearer now,” said Ms Simpson. However, lending from these banks tends to be more expensive.
Jo Eccles of Eccord, a luxury property finder, said: “An investment banker client was considering paying nearly £40,000 extra in fees to get his mortgage privately.
“His high street lender had backed out because of some previous unapproved building works on the £5.5m house he was buying in Knightsbridge.” Ms Eccles managed to bring in an architect to provide advice that changed the bank’s mind.
Another option for those struggling to get a mortgage quickly is to use a bridging loan, although interest rates will be far higher. Hope Capital, a specialist lender based in Liverpool, said it had helped a number of highnet-worth buyers beat the stamp duty deadline by doing this.