How to Buy your House before the Stamp Duty Holiday Deadline
This article, by Chris Pease, Head of Residential Conveyancing, discusses how the stamp duty holiday has affected the housing market and what you can do to ensure you take advantage of the stamp duty holiday.
There have been reports in many news media that hundreds of thousands of buyers across the country stand to miss out on the Stamp Duty Land Tax (SDLT) holiday, which comes to an end on 31 March 2021. This is because conveyancing solicitors, lending and search services are trying to cope with the hugely increased level of activity in the property market.
What does Stamp Duty Holiday mean?
The threshold for paying SDLT has been raised from £125,000 to £500,000 but this “stamp duty holiday” is scheduled to come to an end on 31 March 2021 unless the Government changes its mind.
According to newspaper reports this has led to a 53% surge in sales agreed during the latter part of this year.
Increased number of sales results in increased time scales
Traditionally 80-90% of sales agreed in October, November or December of any year normally complete by the end of March. That figure falls to approximately 50% for sales agreed in January and to less than 20% for those agreed in February. The figure for the completion of sales agreed in March taking place the same month is in single figures.
However, with the increase in the volume of transactions taking place, the percentage figures from a normal year will not apply in 2021. In many cases it is taking more than 5 months for people involved in a sale or purchase to progress from an offer being accepted to completion.
How can you ensure that you have the best chance of completing before the Stamp Duty Holiday ends in March 2021?
First of all, be prepared. Make sure you have all of your paperwork easily available and that you contact your solicitor and mortgage lender early so that they can be prepared when a sale is agreed. It may even be wise for those selling a property to ask their solicitor to carry out a search with the local authority as soon as they decide to put their property on the market to save time.
If you are buying a property think about your mortgage application since the processing of applications and valuations may take longer than usual. A professional mortgage broker to assist you in the process may well help.
Instruct a conveyancing solicitor when you put your property on the market or before you put in an offer so that they can start their ID and anti money laundering checks.
In extreme circumstances you may even want to consider the availability of bridging finance or to look for a property you can buy at an auction.
As the Stamp Duty Holiday deadline of 31 March 2021 approaches, if it becomes apparent that you will not be able to complete a purchase in time to save the SDLT you will need to decide whether you can afford to continue with a purchase and to pay the usual rate of SDLT.
When can you withdraw from a purchase?
Any purchaser can withdraw from a transaction at any time before exchange of contracts with no financial penalty other than solicitors and surveyors fees that have already been incurred.
However, remember that if you have exchanged contracts you cannot change your mind. If you do you risk losing the 10% deposit that will have been paid to your seller on exchange.
Here to Help
If you are thinking of selling or purchasing a home or need advice on any other residential property matter, including SDLT, please contact Chris Pease, Joint Senior Partner and Head of Residential Conveyancing.
Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.