Why buying property before the budget might bag you a bargain

Rachel Reeves' second autumn budget has been one of the most talked-about in years – and that’s before it’s even happened.

Ahead of her speech, rumours have swirled that the government plans to introduce property taxes and mansion taxes, abolish stamp duty and double council tax, none of which will be confirmed until 26 November.

“I have never seen so much kite-flying from a chancellor in the run up to a budget,” says Camilla Dell, managing partner at Black Brick. “This combined with the timing of the budget being so delayed has caused confusion, uncertainty and many buyers and sellers to completely stall their plans until after the budget.”

Buyers, especially, are waiting to find out how the land lies before committing to offers but, ironically, waiting may not be the best policy. We spoke to six property experts about why now might be the best time to snap up a bargain.

Why the budget offers an opportunity for buyers

While no-one likes uncertainty, it does create opportunity for those up for taking a risk. “People want to move, but they’re holding back; not because they can’t afford to buy, but because they don’t know what’s coming next,” says Claire Whisker, founder of First In The Door.

“Periods of uncertainty almost always create opportunity for buyers. When sentiment dips, competition tends to ease and some vendors, particularly those who need to sell now, are keen to agree a deal quickly and are therefore more willing to negotiate on price.”Chancellor Rachel Reeves will deliver her budget on 26 November.·Justin Tallis, PA Images

The reverse is also true. As soon as Reeves has laid out her plans, even if it means homeowners have to re-evaluate their budgets, there will at least be certainty and there’s likely to be a bounce as buyers move forward with their purchases again.

“Once the chancellor sets out her plans on 26 November, hopefully, confidence will return to the housing market and, with it, increased competition and higher prices,” says Simon Caines, property expert at BuyAssociation.

How can you negotiate the best price?

At the moment, our experts say that buyers can get anywhere between 5% and 20% off asking prices, depending on their position and that of the seller. “A slower market means sellers are more open to offers than they have been for years, with discounts of 5% to 10% common,” says Caines.

Read more: How to avoid the stamp duty tax on a holiday home

Negotiating such a big discount isn’t a given though – even in the current market. “It’s a buyers’ market, certainly, but it would be a mistake to assume every seller is desperate or there’s no competition,” says Jo Eccles, Founder of London buying agency Eccord.

Story continues

“Around 80% of the properties we’re acquiring for clients at the moment are being sold at a loss, which can be painful for sellers, so preserving goodwill and credibility is essential. Persuading a seller to accept a lower offer requires judgement and empathy, not just financial reasoning.”Many property buyers and sellers have stalled their plans until after the budget.·andresr via Getty Images

It’s also important to have all your ducks in a row before you put in an offer. “Buyers wishing to leverage this [the pre-budget uncertainty] must ensure they can proceed quickly, and should have legals and financials in place at the time of making an offer,” says Rosy Khalastchy, head of Beauchamp Estates, St John’s Wood.

Cash buyers and those not in a chain have the upper hand. “Position your offer in the best light – include as much detail as possible, and if you are cash and can move with speed, use this as a tactic to lower the price,” says Dell.

How can you protect yourself against risks?

While putting an offer in pre-budget might allow you to reap the benefit of vendors accepting lower-than-usual offers, it’s unlikely you will complete the transaction before the chancellor’s announcements.

“If changes are announced in the budget, transactions in progress could be impacted and buyers may find themselves in the undesirable position of having to decide, with the help of their advisers, whether they are still willing to go ahead at the agreed price,” says Eccles.

In order to avoid this decision, you need to work out how you will cope with every possible scenario before you put your offer in.

“When negotiating a purchase price, buyers should bear in mind that future taxation changes will affect their disposable income,” says Mark Pollack, co-founding director of Aston Chase, and he advises not maxing out your budget.

Read more: How to sell your home before the budget

“I used to say: ‘You shouldn’t be buying it, if it doesn’t hurt’, i.e. to push yourself for the best property you could afford. Now, my advice to prospective purchasers is generally more cautious… Any tax changes have a ripple effect so even if tax changes don’t seem to directly affect you in the first instance, they may still touch your budget through the wider economic impacts.”

As well as not stretching yourself to the absolute limit, Whisker suggests thinking carefully about the type of property you are buying. “Focus on homes that will hold their value long-term, such as those in prime locations or in great condition which don’t need too much work done… A good example of this is a former old vicarage on the edge of a sought-after village.”

As well as long-term value, you also need to consider how long you will be living there. “Is the purchase for the long or short-term? If it is just to flip the property, it’s a very high-risk strategy,” says Caines. Flipping property in the current market is difficult, and it’s likely that it will be even tougher in a future one.

Read more:

Is the ‘golden age of property investing’ over? How you can still make money from flipping property Best credit card deals of the week

Download the Yahoo Finance app, available for Apple and Android.

View comments