Mortgage Clinic: Should I buy now or wait for the stamp duty suspension?
Wednesday 27 August 2008
'I've made an offer on a house, but friends say that if the Government offers a temporary respite on stamp duty, I could save nearly £11,000 and take out a smaller mortgage. Is it too much of gamble?' TM, Milton Keynes, by email
As government interventions go, they don't get more ham-fisted than this. The introduction of a temporary suspension in stamp duty – or delaying payment until years later – might give a fillip to the housing market, but only if the scheme is swiftly and firmly introduced. Instead, it has been floated as just one of many proposals being considered by the Government, so has had the reverse effect, and plenty like you now face a dilemma over whether to "wait and see", in case you can save a sizeable sum in stamp duty.
The problem is, you could be waiting for an awfully long time and end up empty-handed, warns Andrew Montlake at mortgage broker Cobalt Capital. "If you really want the property, I wouldn't rely on the Government to deliver, given its previous record," he says. "Your advantage is that it is a very slow market at the moment so there's a good chance the property won't be snapped up."
Richard Morea, at broker London & Country, agrees: "It's a high-stakes gamble; you could pull out of the sale or just delay completion, only to find that the Government does nothing, and the delay has cost you money in lost valuation, legal and mortgage arrangement fees." One possible way out, he says, is to ask the vendor if they're also buying; they may be in the same quandary as you, depending on a chain, so could also be willing to delay completion.
Alternatively, says Ray Boulger of broker John Charcol, you could turn the uncertainty to your advantage by bargaining on the price. "A reduction might make it worth buying even with stamp duty." Or, he adds, you could "agree sale terms before the Government announces what it's doing on stamp duty, but not exchange until after the announcement". If stamp duty is suspended, the specified target date could allow those who have delayed exchange to take advantage.
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