Time to upgrade to a larger apartment? Ready to cash in on an investment? Moving away to another country? No matter the reason behind the sale, there are certain costs necessary when it comes to selling your property.
How much agent commission you need to pay depends on the amount stated in the signed Estate Agency Agreement. And even if the same agent represents both the seller and buyer, you still have to make payment on the agreed amount.
Before signing on an agent, consider whether you want to enter a ‘non-exclusive’ or ‘exclusive’ agreement because in the latter case, you still have to pay commission to the agent if the property was sold through another agent during the validity period of the exclusive agreement. The same rule applies even if you reached a deal directly with the buyer.
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Since a solicitor will be taking care of the formal sale and purchase agreement, property sellers should take into account the costs for preparing the agreement, registering the deeds and also obtaining the receipt on mortgage discharge if you took out a loan. In addition, there are the disbursements for land search, registration fee for mortgage discharge fee and other miscellaneous items such as transportation and photocopying.
As the seller, you have the responsibility to make sure that all paperwork is in order. If certain documents are missing, you will have to pay an additional fee of up to around several hundred for a replacement from The Land Registry.
Special Stamp Duty (SSD)
Effective from 27 October 2012, a Special Stamp Duty is imposed on residential properties that are sold within 36 months of its purchase. If the property was held for 6 months or less, the special stamp duty is 20%, 15% if more than 6 months but under 12 months, and 10% if more than 12 months but under 36 months.
A word of caution – if you want to back out from a deal after signing a provisional sale and purchase agreement and receiving the initial deposit, be prepared to get sued or pay compensation to the other party because the document is a legally binding contract. If you default on the deal, the compensation you pay the innocent party includes double the initial deposit and his/her agent commission and solicitor’s fee.
Early Repayment Fees
For a seller with a mortgage on his property, be aware that most lenders have a penalty period for early repayment, which usually ranges from 1 to 3 years and the penalty itself is a percentage of the mortgage amount; however, this varies from bank to bank, so be sure that you have included the early repayment fee, if any, in your calculations.