How to Sell at Auction Before the Capital Gains Tax Deadline

With Chancellor Jeremy Hunt announcing that the current Capital Gains Tax allowance for property owners will be reduced from £12,300 to £6,000 from April (and then again to £3,000 from April 2024), more landlords and second property owners are considering selling up.

Taxpayers disposing of residential property have 60 days from the date of completion to report that disposal to HMRC and pay any CGT liability (check your own calculation here).

Whilst this may seem like a fairly tight window, there are ways to sell at auction to ensure that you have the funds available in time to meet this deadline…

1. Approach a Number of Auction Houses

Different auctioneers work to different timescales – and some may have auction dates coming up sooner than others, which will be helpful to you as long as you can submit all of the required information in time. Note that online operators often do not have dates – meaning no waiting for your “spot” in the brochure and a much quicker process.

If you can achieve this – as long as you have done all of your due diligence and your legal pack is in good order – it will be full-steam ahead to auction day.

2. Have a Trusted Conveyancer Ready to Hit the Ground Running

Having to wait for your legal specialist to complete the required paperwork can really slow things down. To avoid this, seek out recommendations for conveyancing solicitors who specialise in auction sales. Make sure they can work accurately to short deadlines.

3. Be Flexible with Viewings

You’re more likely to get bids if plenty of potential buyers have been able to view your property in person. To that end, it’s best to be as accommodating as possible when your chosen auctioneer approaches you to arrange viewings.

The more dates and times you can offer, the better.

4. Consider Traditional Auction Rather than Modern Method

While both of the above methods of auction have their benefits, traditional is almost always swifter.

This approach is also known as “unconditional” auction, while the modern method is also referred to as “conditional”.

Traditional Auction

Via traditional auction, bidding takes place at a set date and time. At the fall of the gavel, the winning bidder enters into a legally binding contract to fulfil the purchase. On the day, they will usually pay a deposit of 10% of the property’s sale price. They will then be given a period of time – commonly 28 days – to pay the rest.

This allows the seller a sense of security; their property has a confirmed buyer and they will be able to plan their future actions around a fixed timescale.

Modern Method

By contrast, properties for sale by the modern method are usually listed online for up to 30 days – sometimes more – and bidding takes place for the duration of that listing.

Once the listing closes, the highest bidder will usually be required to pay a reservation fee. This is commonly 5% of the agreed sale price. From there, they have a set amount of time – usually 28 days, in a similar vein to traditional auctions – to get certain affairs in order and to pay any required deposit. This may include applying for a mortgage and arranging certain conveyancing duties.

After this, the buyer is granted a further period of time, usually an additional 28 days, to exchange contracts.

We mentioned earlier that the modern method of auction is sometimes referred to as “conditional” auction. This is because, unlike traditional auction, the highest bidder does not enter into a legal contract with the seller once the listing closes. To this end, it is still possible for a buyer to drop out. The seller must then find a different way to dispose of the property – taking more time and incurring further expense.

5. Be Responsive

The last thing you want is to discover that you are holding up the sale process yourself! Be sure to have all paperwork at the ready – including property deeds, information relating to any legal covenants, certificates for services, identification and any other relevant documentation.

Respond to emails and phone calls as soon as you can, and take any required action immediately where possible. Your proactivity may inspire others in the process to pick up the pace, too.

6. Talk to Private Property Buyer

There are off market property buyers that can offer a quick, efficient service relative to dealing with those on the open market.

Many such firms will also cover your legal expenses and there will be no estate agency commissions to pay.