The temporary suspension in Stamp Duty Land Tax has had a dramatic impact on the housing market, particularly in the South West, since it was introduced in July. The increased activity and the number of transactions underway, when combined with the ongoing Covid-19 restrictions and furloughing, is on course to create a perfect storm in the Spring unless the Chancellor extends the deadline to benefit from the suspension beyond 31st March 2021, or introduces some transitional measures for a softer landing for everyone.
The prediction of challenging times ahead has made it to the national press and is likely to generate more headlines as the deadline of 31st March 2021 approaches.
There are some interesting articles in Today’s Conveyancer, a link is attached here, that help to give a flavour of the issues that are starting to come into play and will affect your transaction.
We can certainly see the issues bubbling up in the property markets around our locations across the South West, and from working alongside other firms of solicitors and estate agents locally.
WBW will work as best as we can through these challenging times to try and make sure that your transaction does proceed smoothly. We do need to let you know that there will be factors that are beyond our control and that may prevent you from being able to complete by the end of March 2021 and then benefitting from the lower rate of Stamp Duty Land Tax.
In no particular order:-
Searches we need to make
We always advise that clients have a full set of searches carried out on a property so that you can be sure you have a full picture of the property you are buying.
If you are buying with a mortgage, there will usually be no choice but to have these searches in place before you can exchange. We know already that there are a number of Local Authorities where there are now significant delays in processing these required searches. These delays often run into very many weeks and these delays are unlikely to improve in a short time. Some London Boroughs and rural Local Authorities have already confirmed that results for searches submitted now will not be issued before 31st March 2021.
Lenders and surveyors
We know that lenders furloughed staff in Lockdown 1 and we know that a number of lenders still have staff furloughed or working remotely. This does mean that it is taking longer for mortgage applications to be considered and offers produced. A mortgage offer is also dependent on a survey of the property being carried out and we are aware that these surveys are also taking longer to book in and then be produced. This has a clear knock-on effect on the issue of the mortgage offer you will need to proceed.
The number of transactions
We know that the market locally is extremely busy and that we, and our fellow local firms, are working hard to make sure that transactions progress as quickly as they can.
However, the volume of transactions does mean that from time to time, this ability to move transactions on is slower than one might want. We also tend to experience more delays with firms that are further afield as they are not as familiar with our local market as nearby firms are.
Please be patient and try not to chase us every day – we know it is tempting but sometimes the chasing takes us away from the work we need to do on your behalf.
The impact of the recent Lockdown 2 and the tier restrictions in place are certainly having an impact, both on the market and on the individual chains of transactions.
This is particularly the case if people are poorly with Covid or self-isolating as a precautionary measure in a chain, both before and after exchange.
Although we will do our best and liaise with others involved in the process to mitigate any hurdles, the speed of the transaction in a chain is dependent on the speed of all of the other transactions involved. The issues above will affect each and every transaction in a particular chain so, at times, these can have a cumulative effect and generate additional delay, even when we are trying to minimise potential issues on your transaction.
Property lawyers are often the last link in your move and it is only when we have all the pieces, which we are dependent on obtaining from others, that buyers and sellers can move forward and make substantive progress.
How can you help?
Let us know if the SDLT concession has had a bearing on the price agreed
If you agreed a lower purchase price based on being able to benefit from the lower rate, and where completion is required before the 31st March 2021 deadline, you need to let us know as soon as possible.
Make a decision now on whether you would go ahead regardless of the SDLT
Decide now whether you would still want to proceed if the SDLT reduced rate is not available to you. If you would still want to go ahead regardless, you must make sure that you have the funds available to do so to pay that higher rate of SDLT.
If you are in a chain, even if you want to continue without the lower rate of SDLT, others in the chain may not, which may mean that you will not be able to proceed in any event. You should discuss this with your estate agent sooner rather than later so you have a clear idea of the intentions of other buyers along your chain on transactions.
Don’t assume the deadline will be met
You cannot assume completion by 31st March 2021 as the completion timescale is dependent on so many other factors outside you and our control. Even if your purchase started some time ago, you cannot guarantee that there will not be a last minute hiccup on your purchase or indeed somewhere else in the chain that would mean the deadline is missed.
Risk of a late completion – you could be liable for the usual rate of SDLT
Be aware that if contracts are exchanged but the transaction does not complete on the completion date, you may unwittingly become liable for the usual rate of SDLT if completion takes place after the 31st March 2021 deadline.
WBW Solicitors will not be liable for any costs or tax due in this transaction should it fail to complete on the contractual completion date – it is important that you understand this risk.
Lender conditions in your mortgage offer
Check your mortgage offer to make sure whether your lender has imposed a condition in the offer that the transaction can only proceed provided that the SDLT concession is available. If so, you need to be aware that you will not be able to use that particular mortgage to purchase the property should the SDLT concession be withdrawn or completion does not take place before the 31 March 2021 deadline. Please bear in mind that, if you have a lender, we will be acting for them too and we must also meet and satisfy their requirements.
Be flexible and patient
If you are in a chain of transactions, everyone needs to be able to exchange and complete in an agreed timescale. Be prepared to compromise and be patient!