Selling a high-end home needs all your attention

The conventional residential market in Edinburgh has actually been motoring along nicely since the start of the year. Picture: Ian Rutherford.
The conventional residential market in Edinburgh has actually been motoring along nicely since the start of the year. Picture: Ian Rutherford.
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Despite concerns over a second independence referendum and the forthcoming vote on EU membership, the conventional residential market in Edinburgh has actually been motoring along nicely since the start of the year.

Until, that is, you break the £600,000 price barrier where the problem is not a reluctance to trade up but the fact that buyer options have become severely limited by draconian levels of Land and Buildings Transaction Tax (LBTT).

Those operating at the coalface of estate agency will be familiar with this hypothetical but not untypical example.

A professional married couple with two young children decide to sell their central Edinburgh home, perhaps a large flat or part-townhouse, and move to a large detached villa in a high-end small town or rural location within reasonable commuting distance of the capital.

Eventually they come across a property that seems to fit the bill; the asking price is £950,000 and the fact that the kitchen and bathroom require upgrading is not, initially, a deterrent.

So far so good. Then our couple start to study the figures in depth and discover the asking price will incur an LBTT charge of £72,350 – roughly what they had expected to pay for the kitchen and bathroom upgrades.

They can afford the improvements or the tax but not both and so the move falls through.

Some may take the view that for anyone able to afford a home valued at close to £1 million, LBTT is a relatively small extra expense.

But this assumes people within this category are silver-spooned cash buyers whereas most of them need to service mortgages and, just like those operating within lower price ranges, have budget limits which they cannot exceed.

This is the reality of the “tax trap” facing buyers at the upper end of the market. LBTT on a £200,000 purchase is just over 0.5 per cent, on a £1m purchase it’s almost 8 per cent.

Sadly, because the way LBTT is structured, knocking a few thousand quid off the asking price will not reduce the buyer’s tax bill by very much, so the selling strategy for those top-end properties has to be based on presenting the property to the market in a condition that needs as little spent on it in the immediate future as possible in terms of the fabric of the building.

Obviously, the vendor should strive for a home report which gives the property a “1” – no maintenance issues, or at the very least a “2” – some repairs desirable but not essential.

At this end of the market a home report with category “3” will almost certainly put viewers off and lead to negotiations where the buyer can use that score to their advantage.

In a nutshell, the house needing not a penny spent makes the LBTT charge “more affordable” for the buyer and is therefore more likely to sell.

Another area where the top-end seller has to go the extra mile is a flexible attitude to viewings but it is not uncommon for vendors to decline viewings at short notice because they are busy or have visitors.

I can understand the inconvenience but guests should make themselves scarce and diaries should be rearranged to accommodate a viewing.

Selling your most important asset has to have priority in the current market.

• Deirdre Coogan is head of residential sales at DJ Alexander Legal