Can a quick sale give you the freedom to maximise your options – or could you get bogged down in fees, tax and regulation?
The UK housing market has experienced some fluctuations in recent years – mainly due to factors such as interest rates, economic conditions, and changing government policies. While the market has shown resilience, there are regional variations and uncertainties – house prices have seen growth in some regions but have stabilised or declined in others.
The overall market is expected to remain competitive. The time it takes to sell a house after buying it, can vary depending on factors like location, pricing, and market conditions.
Demand remains strong in most areas, driven by factors like population growth and limited supply. However, concerns about affordability persist, particularly in major cities, leading some buyers to consider more rural or commuter locations.
Why sell a house after buying it so soon?
The volatility in the housing market is matched in part by growing volatility in the jobs market. This is one of the commonest reasons for people to sell quickly. As well as job relocation, other factors include changing personal and financial circumstances – especially if a quick resale could be financially advantageous.
But, people often have questions about the implications of selling a house shortly after purchase.
Here are Four Frequently Asked Questions about selling soon after purchase…
1. Is it legal to sell a property as soon as you’ve bought it?
Yes.
While there’s no specific law prohibiting the sale of a house shortly after purchase, there are other things to consider.
Most mortgages have a ‘repayment period’ or ‘early repayment’ clause. So if you sell within a certain period (usually 2-5 years), you may be subject to a penalty fee.
Importantly, you cannot resell a property until the sale has completed in your name. The completion stage is the final step in the house-buying process, where ownership is transferred from the seller to you – the buyer.
There are some key stages:
- Exchange of contracts: The buyer and seller exchange signed contracts, making the agreement legally binding.
- Payment of the purchase price: The buyer pays the agreed-upon price to the seller’s solicitor.
- Transfer of title: The property title is officially transferred from the seller to the buyer.
Once completion is complete, you becomes the legal owner of the property – and that’s the earliest you can legally sell.
2. Will I pay more tax if I sell a property early?
Possibly!
The specific tax implications depend on several factors – including timing and type of tax.
Stamp Duty Land Tax (SDLT)
If you sell a property within a certain period (usually 2 years) after purchasing it as your main residence, you may be exempt from SDLT on the profit. However, if you sell it sooner, you may be liable for SDLT
Capital Gains Tax (CGT)
This is a tax on the profit made from selling a property. If you sell a property within a certain period (usually 2 years) after purchasing it as your main residence, you may be exempt from CGT on the profit. However, if you sell it sooner, you may be liable for CGT.
3. Does it affect getting a mortgage if I intend to sell soon after purchase?
It can…
If you plan to sell a property soon after purchasing it, lenders may be less likely to approve your mortgage application. Here’s why:
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- Risk Assessment: Lenders assess the risk of default when granting mortgages. Selling a property early can indicate financial instability or a change in circumstances that may increase the risk of default.
- Valuation Concerns: If you sell a property soon after purchase, lenders may be concerned about its valuation and whether it has appreciated sufficiently to cover the mortgage and any potential losses.
- Mortgage Terms: Some mortgage lenders may have specific terms or restrictions regarding the sale of a property within a certain period after purchase.
It’s important to be totally transparent with your lender about your intentions to sell the property early. Then they can assess your situation and determine if you’re still eligible for a mortgage.
4. How easy is it to sell my house soon after purchase?
It depends on the market, among other things.
Reselling a property you’ve just bought depends on several factors, including:
- Current market conditions: If the housing market is hot, you may be able to sell quickly and potentially at a profit. However, if the market is slow, it could take longer to find a buyer.
- Your location: Properties in desirable locations tend to sell more quickly and for higher prices.
- The condition of your property: A well-maintained property with desirable features is more likely to attract buyers.
- Timing: Selling a property soon after purchase may be more challenging due to factors like stamp duty implications and potential disruption to the property chain.
- Legal and financial considerations: There may be legal and financial implications associated with selling a property soon after purchase, such as early repayment charges on mortgages or capital gains tax.
If you are thinking about selling your home privately it’s important to understand the steps involved to ensure a smooth and successful sale. While it’s always possible to resell a property soon after purchase, it’s important to consider these factors and consult with a real estate agent or financial advisor to assess your specific situation and determine the best course of action.
Conclusion
Sometimes it is advantageous to sell straight after you buy – but as you can see there are a host of complex conditions that can impact this kind of sale. There could be added costs and tax implications, and the market may not be as responsive or as buoyant as you’d want. One of the best ways to mitigate these issues is to look for a cash buyer.
Cash house buyers – like Zapperty – can make you an offer straight away, so you get the benefit of selling your house fast, without many of the fees and charges that come with traditional estate agency. With Zapperty you could be getting your hands of the money in just seven days – leaving you free to move quickly, with complete confidence.