What you need to do if you want to complete before the Stamp Duty holiday ends
There is only two months until the Stamp Duty holiday extension deadline of 30 June 2021. Many recently-started property sales and purchases may not complete before the holiday ends.
However, there is still time for proactive buyers and sellers to take steps to avoid foreseeable delays and (potentially) speed up the conveyancing process.
Why is time running out?
Since the Stamp Duty holiday was announced in July 2020, the UK property market has boomed. Conceived as a measure to stimulate a depressed market, the holiday has helped property sales to reach record highs.
Property professionals are trying to contend with the unprecedented increase in demand whilst struggling with the constraints of operating in a COVID safe environment.
House sales are now taking an average of five months to complete once an offer has been accepted, putting completion before the deadline seemingly out of reach for newly-agreed sales.
How does the Stamp Duty holiday extension work for homebuyers?
On 8 July 2020, the Chancellor announced lower Stamp Duty Land Tax (SDLT) rates for homebuyers in England and Northern Ireland.
The new SDLT rates meant that buyers of homes sold for up to £500,000 will not pay any Stamp Duty on their purchase.
On average, buyers will save around £2,500, with those buying at the £500,000 threshold saving a maximum of £15,000.
What can I do to speed up the process?
Getting the draft contract pack out to the buyer’s solicitors as soon as possible after an offer has been accepted should be your first goal.
The pack includes sales memorandum (details of the property), completed property protocol forms, and the draft contract itself.
The conveyancing process cannot progress until the seller’s solicitor has sent this initial pack of documents to the buyer’s solicitor. However, the seller’s solicitor cannot send the pack out until they have received all of the completed forms and documents from the seller.
It typically takes around two weeks for a solicitor to send the pack out, but under COVID conditions further delays are likely.
What can sellers do to kickstart a faster sale?
Instruct a solicitor when you market your property
Instructing a solicitor as soon as you market your property may be the single most effective step towards accelerating your sale.
Even before you find a buyer, you can get your solicitor’s new client formalities out of the way (such as verifying your identity, completing money laundering checks and agreeing to the solicitor’s formal terms of engagement).
Property forms
Once your solicitor is formally instructed, you will need to complete various property forms including the TA6 Property information form, the TA10 Fittings and contents form, and the TA7 Leasehold information form (if you are selling a flat).
The TA forms are detailed, take hours to complete and require the seller to source supporting documents such as proof of planning permission for any work you have had done, and gas safety certificates.
Locate documents
First-timer sellers often leave the TA forms for a few days, assuming they can complete them quickly. However, the forms require you to supply several documents that you will need to hunt down.
Once your solicitor has the completed forms and the supporting documents, they will be able to familiarise themselves with your property’s potential legal issues, and can be ready for any problems or issues that may arise.
You should aim to collate the supporting documents required by the TA forms as soon as possible, and immediately inform your solicitor if you can’t find something.
Apply for management pack
If your property is a leasehold you will need to obtain a leasehold information pack from your freeholder or maging agent. The pack contains information about the lease itself, service charges and upcoming works. The pack must be provided to the buyer’s solicitor.
Chris Salmon, Director of Quittance.co.uk said, “Even before the COVID-related delays, obtaining the leasehold pack could take four to six weeks and was a major source of delays in the conveyancing process.”
“With managing agents struggling to meet demand, delays of months are now a reality. Yet, with a solicitor onboard from the outset, sellers can apply for this information in advance and it can be sent out with (or shortly after) the draft contract pack goes out.”
Can buyers do anything to speed things up?
Although much of the pre-offer work needs to be completed by the seller, there are still steps that a buyer can take to help avoid delays.
Instruct a Solicitor
In the current climate, some solicitors are so overloaded with work that they are turning new work away. Delays could occur if you haven’t instructed a solicitor before finding a property. Complete the initial paperwork as soon as you can.
Arrange finances
Lenders are inundated with mortgage applications and it is taking longer to process formal offers. You can help speed things up if you find a lender, choose a mortgage product and ask for an agreement in principle (AIP) whilst you are still house hunting.
Apply for searches
Your lender will require various searches including a Local Authority search and drainage and water search. Most local authorities are overwhelmed and could take months to return searches. Although you cannot apply for searches until you find a specific property, make sure your solicitor applies for these as soon as your offer is accepted.
Book the property survey
Surveyors are also backlogged. If you intend to have a homebuyers survey, book it immediately. Contact various surveyors to see who can carry out a survey the soonest. Ask your lender whether their surveyor can carry out a more detailed Homebuyer survey at the same time as the mortgage survey. Prioritising speed over price may ultimately save you money in the long run.
Keep pushing things along
Communication is the most critical component of the conveyancing process. Make sure you keep your solicitor and the agent in the loop at all times, and make sure you get confirmation of receipt of important documents and decisions.
If you think your emails are being ignored, pick up the phone and don’t worry about being a nuisance – it’s better to be a nuisance now, when it will make a difference, than in mid-March when it will be functionally too late.
Make a contingency plan
Even if you do everything you can to complete before the deadline, an unexpected or unavoidable delay could still throw off your plans. You should have a backup plan in place if the deadline is missed.
If the additional Stamp Duty cost would make your purchase unviable, you could negotiate a reduction with the seller. You could suggest “splitting the difference” of the Stamp Duty increase with the seller now, on a contingency basis, rather than days before the end of March..
As with any renegotiation, you will need to weigh up the risk that the seller refuses or pulls out, but raising the issue now will make it seem much less like an ultimatum, and will give the seller time to consider and plan ahead.
If you’re considering a house move, now is the time to get moving and Bourne are on board to guide you smoothly through the process. Book your free valuation here.
Browse our available properties here.
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Chris Salmon – Author Bio
Chris Salmon is a co-founder and Director of Quittance Legal Services.