Worried about completing before the Stamp Duty holiday deadline? Here’s what to do.
The Stamp Duty Land Tax (SDLT) holiday extension, announced in March, offered relief to buyers and sellers fearful of missing the deadline.
With the revised Stamp Duty deadline (31st June 2021) fast approaching, completing in time could still be tight – especially given the current backlogs in the conveyancing process.
So what can buyers and sellers do to accelerate the conveyancing process and maximise their chances of completing before the deadline?
What happens when the deadline expires?
If you complete on a property you are buying for under £500,000 before the deadline on 31st June 2021, you will pay no Stamp Duty.
If you complete after this date, but before 1st October, you will only pay Stamp Duty on properties purchased for £250,000 or above. From 1st October, the Stamp Duty rates return to pre-pandemic levels, with the minimum threshold dropping to £125,000.
From July, the SDLT threshold for first-time buyers will remain at £500,000.
Delays in the conveyancing process
Before the pandemic, the conveyancing process took an average of 3 months to complete. Of course, averages can be misleading insofar as they hide variation. Some chain-free and mortgage-free purchases might sail through in under a month, whereas a more complicated leasehold transaction could take 6 months or more.
Since the Stamp Duty holiday was announced in March 2020, the property market has gone into overdrive.
Property professionals have been handling unprecedented demand, at the same time as juggling the constraints of COVID-safe working measures.
Conveyancing solicitors, themselves buckling under the demand, must collate information from local authorities, lenders, HM Land Registry, and managing agents – all of whom are significantly backlogged.
What can buyers do to speed up the conveyancing process?
There are several things that buyers can do, early on, to get their purchase off to the fastest start.
Instruct a solicitor before you find a property
When you instruct a solicitor, the first thing they will need to do is carry out ID verification and anti-money laundering (AML) checks. The solicitor cannot act for you until these checks are complete, and they can take some time.
With most property solicitors offering No Move, No Fee conveyancing, there’s no reason not to instruct a solicitor and get the ID checks out of the way as early as you can – you don’t need to wait until you have an offer accepted.
Order searches ASAP
Even before COVID, property searches were probably one of the most likely causes of delay. You should ask your solicitor to order these searches as early as you can, to reduce the risk of a long delay impacting your sale.
Get a mortgage agreement in principle
A formal mortgage offer is tied to a specific property, so you won’t be able to get everything finalised until you have found a property and the conveyancing is well underway. However, you should still get a mortgage agreement in principle (AIP), sometimes called a decision in principle, or DIP) as soon as you can.
Getting an AIP will mean you have passed your chosen lender’s affordability checks. Applying only once the conveyancing process has begun could lead to delays if your preferred lender rejects your application.
At the start of the conveyancing process, the bulk of the work falls on the seller. Once all the forms and further enquiries are complete, however, the ball is in the buyer’s court (or that of the buyer’s solicitor).
Your solicitor cannot do much to speed up delays with property searches, lenders or managing agent’s information, and they won’t appreciate being chased for updates when there is nothing to report. Instead, the key to proactive communication is keeping all parties in the loop, responding rapidly to any queries you are sent, and planning ahead.
What can sellers do to help accelerate the process?
Even if you haven’t yet found a buyer, fast conveyancing is all about being proactive and preparing as much as possible ahead of time.
Start the legal process ASAP
Many sellers aren’t aware that they can start the conveyancing process before they find a buyer. It is a good idea to make this the next step after meeting an agent and putting your home up for sale.
With your solicitor onboard, the necessary ID and money laundering checks, and the legal instruction formalities can be completed as the marketing phase begins.
Complete the TA property forms
Your solicitor will ask you to complete several forms about the property you are selling, called TA forms. These forms include a wide range of questions about the property you are selling, including building works, neighbour disputes, and fixtures and fittings.
The forms will also require you to provide supporting documents to prove, for example, that you had planning permission for alterations, and gas and electrical safety certificates.
Completing these forms and finding all the additional paperwork can take some time, so you should start as soon as you receive the forms. Your solicitor cannot really do anything until they have the completed forms back, and you may also need feedback from your solicitor before you can fully answer some questions.
Source leasehold information
If you are selling a leasehold property, your solicitor will need to source information from the managing agent responsible for the maintenance of the common parts of the freehold property. This information is often called the “managing agent’s pack”.
The pack contains details of planned maintenance and service charges, and the buyer’s solicitor will require the pack to properly advise the buyer.
Chris Salmon, Director of Quittance, said: “Sourcing managing agent information is one of the most common reasons for delays when selling a leasehold property. Although some agents and freeholders will supply this information quickly, it can take weeks to obtain. With the added pressures over the last year, some agents are taking up to two months to supply the full pack.”
“You should ask your solicitor to source this information as soon as you can, ideally when you put your home up for sale, to help avoid what could be a significant delay.”
Proactive communication (again)
Communication is just as important for sale conveyancing as it is for buying. Replying quickly to your solicitor’s questions and returning forms ASAP is the easiest thing you can do to speed up your sale.
Conveyancing relies on many parties working in concert to keep the process moving forwards. Although you don’t need to be sending daily chase emails, you should still chase for an update or confirmation of receipt when appropriate.
Given how busy conveyancing solicitors currently are, regular, proactive communication and prompt replies will help ensure you stay near the top of your solicitor’s caseload.
Expect to miss the deadline and plan ahead
Unexpected delays can occur at any stage in the conveyancing process. These delays can include last-minute issues with lenders and adverse search results.
Even if your sale or purchase is close to completion, you should still consider what would happen if the Stamp Duty holiday ends before you complete.
If you are buying, you should budget for an unexpected SDLT bill. If your budget is already tight and you simply couldn’t cover an additional £2k or £3k expense, you could discuss splitting the SDLT cost with the seller.
If you are selling, you could suggest making a contribution to any potential SDLT, rather than risking the sale falling through. At this late stage, finding a compromise is almost certainly a better option than hoping for the best only to learn that your buyer has had to pull out due to the additional Stamp Duty cost.
As is the case throughout the conveyancing process, communication is key. Your solicitor and agent are both incentivised to help your move complete and have years of property experience. Keep your solicitor and the estate agent in the loop regarding all matters, and don’t be afraid to ask questions and discuss your options.
If you’d like to discuss the stamp duty holiday ending or any other property enquires contact our friendly team today!