Fees explained: Buying and selling with MMoA

The popularity of property auction in the UK has continued to climb over the last year, this has been accelerated by the lockdown, as more and more people looked for online options for their property journey and so turned to the Modern Method of Auction (MMoA).

MMoA, also known as Conditional Auction, offers vendors a method of sale that gives them the opportunity to sell or buy their property in a transparent, secure and speedy manner and can provide financial benefits along with an extensive range of properties.

Whether you’re thinking of buying or selling your home, it’s important to consider all the potential fees involved throughout the process. We’ve put together an at-a-glance list of the charges you’re likely to encounter with MMoA so you’re prepared and informed.

Fees for the buyer

The Reservation Fee/Deposit

The Reservation Fee is used to cover the seller’s auction and Estate Agency fees. This is paid by the buyer to give their commitment to purchase from the seller and reserves the property exclusively to them during the reservation period and it is non-refundable. As the buyer, you should take into consideration the Reservation Fee when deciding the total amount you wish to pay for the property as the Reservation Fee is paid on top of the agreed purchase price. The Reservation Fee paid is typically 4.5% (of the purchase price) including VAT and is subject to a minimum of £6,600 including VAT, which can vary depending on the property.

The Reservation Deposit is paid in the instances that the seller agrees to pay the fees. It is also non-refundable and is incorporated into the total agreed purchase price. The Reservation Deposit paid is typically 4.5% (of the purchase price) and is subject to a minimum of £6,600, which can vary depending on the property.

Stamp Duty

According to the current HMRC policy; the chargeable amount for stamp duty is whatever the seller has been given (directly or indirectly) for a buyer to purchase the property – this includes any fees which must be paid in order to acquire the property. This means that whatever the buyer pays, it will accumulate as the purchase price for the property and will therefore be included in their liability for stamp duty.

Mortgage Applications

When looking for a mortgage, although it is unlikely that a lender would allow any fees associated with buying a property to be included within their mortgage calculation, it is always worth speaking to your mortgage provider in order to find out the details.

Fees for the seller

Reservation Payment

With MMoA, typically there is no selling fee for the seller, and the buyer pays a non-refundable Reservation Fee of 4.5% of the final agreed purchase price (subject to a minimum of £6,600 inc. VAT). Commonly, the buyer pays this at the point the sale is agreed, as this commits them to the purchase but also secures the property exclusively to them however, sometimes the seller chooses to pay the fees themselves on completion.

This reservation payment would be paid in addition to the purchase price. The buyer will consider this within the total amount they wish to pay for the property. In this instance, the buyer makes payment of a Reservation Deposit when the sale is agreed upon. This forms part of the purchase price and ensures you have their commitment to the purchase.

In most cases, the buyer pays this at the point the sale is agreed, as this commits them to the purchase but also secures the property exclusively to them. This reservation payment would be paid in addition to the purchase price. The buyer will consider this within the total amount they wish to pay for the property.

In the instance where the seller chooses to pay the fees themselves on completion, the buyer makes payment of a Reservation Deposit when the sale is agreed, this deposit forms part of the purchase price, which ensures you have their commitment to the purchase.

Auction Pack

If you decide to sell your property via MMoA, you will need an Auction Pack. These Auction Packs contain vital information about your property that a potential buyer needs when deciding if they wish to place a bid and are a legal requirement. That includes:

• General Terms and Conditions
• Fixture and Fittings Form
• Any special conditions of sale
• Local Authority Search
• Title Plan and Register or Epitome of Title
• Property Information Questionnaire
• Water and Drainage Search
• Reservation Form or Contract

iamsold provides a comprehensive Auction Pack, so speak to your Auction Specialist for up-to-date pricing information for this or alternatively, pricing can be found detailed in your Auction Contract.

You can provide your own Auction Pack if you prefer, including an electronic copy of the documents before your property sells. If your property is a Leasehold, you may also need to provide a Management Pack which can be requested from your Freeholder or Managing Agent.

As with any sale, whether you are the buyer or the seller it is important that you fully understand the fees and liabilities associated with the sale. As fees may vary depending on the method of sale you need to ensure that you carefully read the property documentation and take into consideration all of the above.

For more information about auctions, you can see the answers to some frequently asked questions, our FAQs or download our buyer’s guide or seller’s guide