With only three months of the stamp duty ‘tax holiday’ remaining, first time buyers must act quickly to avoid paying Stamp Duty Land Tax on their home purchase, the National Association of Estate Agents has warned.
From March 2012 the holiday is well and truly over for first time buyers. Once the Government ends the tax exemption, FTBs will face a tax of 3% on all home purchases over £250,000.
‘With many first time buyers trying to purchase their first home before the tax exemption deadline, our members will be working closely with those first time buyers who are able to purchase before March 2012 to guide them through a difficult and challenging market place,’ said Peter Bolton King, chief executive of the NAEA.
The organisation has launched new advice for first time buyers. It advises then to be aware of affordability.
‘The key word for lenders is affordability, and it should be for you as well. The amount you can borrow from a lender should depend on how much you can afford to repay each month. But when deciding on your budget, remember that what seems affordable at the time of purchase might not be so affordable once interest rates move or your employment situation changes,’ says the booklet.
It also points out that first time buyers should remember to include professional costs in their budget and that it can be easy to forget the need to set aside cash for fees to lenders, insurers, surveyors, and other professionals.
It says to select agents carefully.
‘Buying your first home can often be a stressful experience, as well as the biggest financial transaction of a person’s life. Choose an NAEA member. They are licensed, in order to protect buyers and sellers and raise standards in the industry. The NAEA licence is also supported by the Government, and so you should always look for the NAEA licence logo when buying your home,’ it says.
The NAEA also advises buyers to keep a paper trail.
‘There can be a lot of paper to keep track of when buying a home, but it’s important to keep an organised file with all your documents associated with the purchase in it. For first time buyers it is also sensible to keep detailed notes about the properties that you’ve viewed including important information such as possible repairs needed to the kitchen or bathroom as these can eat significantly into your budget if urgent work is required,’ the advise continues.
And buyers should not exceed their budget.
‘When you’ve made your mind up, and it is time to put in an offer, always remember what your maximum offer is. The amount you decide to open with is vital, so work out what your absolute maximum purchase price, and then work backwards,’ it says.
‘If your first bid is turned down, then be flexible where possible with your second offer, but don’t automatically jump to your maximum affordability. Meeting the buyer half way can be a good response to show you are serious,’ it adds.