If you are in the process of buying a property, you will undoubtedly have considered whether you will be able to take advantage of the stamp duty land tax (SDLT) holiday, allowing you to save up to £15,000 on your property purchase.
Stamp duty holiday – demand and delays
The SDLT holiday was introduced in the summer of 2020 to stimulate the property market which experienced a dip in activity arising from the Covid-19 restrictions.
The intention was to incentivise potential home buyers by increasing the threshold at which stamp duty is charged on residential property purchases from £125,000 to £500,000 – the proviso being that purchases must complete on or before 31 March 2021.
The scheme has arguably been too successful, and the property industry has experienced unprecedented pressure as more and more people race to take advantage of the tax break.
Indeed, surveyors, mortgage lenders, search agencies and conveyancing lawyers are struggling to meet demand whilst home buyers fear they will be unable to take advantage of the SDLT holiday given that the average period for a property transaction to progress from acceptance of the offer to completion has increased from 12 weeks to 16 weeks.
Will the stamp duty holiday be extended?
The government originally stated that it had no plans to extend the stamp duty holiday beyond 31 March 2021 but, as we have all come to accept during the current pandemic, government guidance and rules have been the subject of last-minute changes and amendments.
At the beginning of 2021 there were rumours that an extension of six weeks may be allowed to account for delays in the process and, in response to an online petition that had been set up to lobby the government to consider an extension to the SDLT holiday, the matter was debated in Parliament on 1 February 2021. The debate concluded that some sort of tapered end to the SDLT holiday would be beneficial to home buyers who were at risk of being unable to complete their purchase by 31 March 2021 in view of the pressure on the property industry.
It is now suggested that the Chancellor could allow buyers to benefit from the SDLT holiday where their transactions have passed a certain point by 31 March 2021 deadline date. Further announcements are expected as part of the Budget, scheduled for 3 March 2021.
What can buyers and sellers do?
There are several things that both buyers and sellers can do in the meantime to ensure their property transaction moves as efficiently as possible.
Instruct a solicitor. Buyers should instruct a solicitor as soon as an offer is accepted, and sellers should instruct a solicitor as soon as their property is listed.
Get an Energy Performance Certificate (EPC): A Seller is required by law to produce the EPC to their buyer. The EPC must be renewed after 10 years but if you have carried out any alterations or improvements to your home you must arrange for an updated assessment to be carried out. If in doubt, you should discuss this with your conveyancing solicitor.
Collate any certificates and guarantees: Sellers should also gather together any other paperwork, such as planning permissions and compliance certificates and guarantees relating to any works or improvements carried out to their home.
Check the electrical installations and gas appliances: Whilst Sellers are not legally required to do so, they could also arrange for the electrical installations and their central heating boiler to be safety checked and inspected by appropriately qualified professionals, so that they can hand over their property to their buyer safe in the knowledge that everything is in good working order.
Sort out a mortgage in principle. Buyers must make sure they have their finances in place. If they need mortgage finance to assist them with their purchase, they should start the mortgage process even before they make an offer on a property. It is important that buyers know exactly what their lending potential is likely to be so that they can look at properties within their price range. Many lenders are currently experiencing delays, and mortgage options are fewer – particularly for first-time buyers. So, the best advice for buyers is to get a head start!
Consider time for searches. Many local authorities are struggling to keep up with the demand for processing search applications. Whilst a cash buyer can take a view as to whether to proceed with their purchase with the benefit of the information revealed by the searches, those buyers who are purchasing with the assistance of a mortgage do not have a choice as it will be a condition of the mortgage that all searches are carried out before the mortgage funds are drawn down. Buyers should discuss anticipated timescales with their conveyancing solicitor. Processing timescales vary from one local authority to the next.
Our conveyancing team is here to guide and support you through the process of your sale or purchase. Just give us a call on 01752 663295, we would be happy to hear from you!
Partner, Chartered Legal Executive