Rishi Sunak is said to be preparing to introduce a three-month extension to the stamp duty holiday to allow more time for existing property deals to be completed.
The chancellor is planning to announce a limited extension through to the end of June to help prevent thousands of property sales from falling through, the Times has reported. Something we predicted back at the end of January.
Sunak has been under growing pressure to extend the deadline amid concerns it will create a cliff-edge and risk thousands of buyers pulling out of transactions if they miss the deadline for the tax break.
A petition demanding a stamp duty holiday extension, which has proved popular with buyers and sellers, as well as agents, conveyancing solicitors, mortgage lenders and surveyors, has now attracted more than 150,000 signatures.
The Times has been told that the chancellor will use his Budget next week to move the stamp duty holiday deadline to the end of June, bringing it into line with the easing of lockdown. The extension to the policy could cost the Treasury around £1bn.
Our piece from the 29th January is below which offers some hopefully useful insight into how you can get prepared to ensure you do everything you can to get you home sale completed before this date.
Delays in the home buying process at the moment mean that those that miss the stamp duty holiday deadline will have up to £15k extra to pay on their purchase. So will the government extend the deadline? If so, when? And what can you do to speed up your purchase?
Its the question I’ve been asked on a daily basis since we returned back after Xmas and with the complexities around the home moving process currently and the risk of more than £3.4 billion in lost fees and commission to estate agents, lawyers and surveyors if people buying homes drop out of purchases because they cannot complete deals before the stamp duty holiday ends results in their being a real need for some clarity on what happens next.
One in five of the 457,358 purchases that were at the sold subject to contract stage at the end of last year, or more than 91,400, are expected to fall through if the chancellor sticks to the deadline of March 31. A further 31,250 of the 125,000 sales agreed this month could also be abandoned. This coupled with delays in mortgage approvals, local searches and surveyors mean that the average property transaction time has gone from 12 weeks to 18 weeks means that tensions are high for anyone in the process currently.
So what do i think will happen? At this point in writing this blog (29th January) there does appears to be a genuine desire from the government to engage with dealing with a way to satisfy the above whilst also bringing the stamp duty holiday to an end. There is talk of it being reformed entirely however given the priorities the government face currently, it doesn’t feel like now is the right time for this. My own assessment is that we’ll see a 3 month extension put in place which will run till the 30th June 2021, this should in theory give everyone in the system the opportunity to complete on their sale and purchase without creating a stampede of new homes coming onto the market to benefit from the tax saving. This feels like the most straight forward and obvious play and one i would expect to be announced in or around the 3rd March budget. I must stress, this is just an opinion piece based on everything i am seeing and hearing.
1. Find an Estate agent with a real plan of how they are going to get you from sold to completion
It cant be underestimated how complex and stressful the legal process can be if not managed correctly and so understanding this from the outset and having a plan from the get go is paramount to you being successful. I cant stress how critical it is to have a plan from the get go to ensure you stay on track and hit your milestones in a timely fashion.
This will save you 2/3 weeks by doing this upfront and so getting your property information pack completed ideally before you receive an offer is a must especially in the current climate
3. Choose the right solicitor conveyancing partner for you and for your agent
Choosing the right conveyancer is absolutely critical but what is often not considered is how they are going to work with your agent. There has to be a relationship between the two parties and if there isn’t, communication is always impacted causing stress to all sides. Take advice from your agent on who they would recommend and most importantly why?
4. Sort your Energy Performance Certificate
Also known as an EPC this has to be included with a sale by law. It shows how energy efficient your new home is and if you moved in within the last 10 years, yours is still valid.
5. Get your paperwork together
If it’s a leasehold, find the lease. Locate certificates showing compliance with regulations of any works done from planning permissions to FENSA certificates for window replacements. Don’t forget valid guarantees a home buyer will want to see.
6. Get a mortgage agreement in principle before you make an offer on a property
Many lenders and brokers are experiencing COVID related delays and mortgage choices have significantly reduced, especially for first time buyers. Avoid wasting time later down the line and start the mortgage process now
In uncertain times like these, home buyer protection insurance covers buyers for some of their legal and survey costs as well as mortgage lending fees should your purchase fall through.
8. Build in time for local searches
Covid-19 and now lockdown restrictions mean many local authorities are struggling to supply their own searches and also to provide access to data for personal search companies.
If you are moving within an area you know well, then “no search indemnity insurance” will cover you if one or more searches do not come through before you need to exchange. But you’ll need to check your lender would be happy to lend on that basis.
9. Plan for the worst case scenario
While we’re calling on government to change the stamp duty regime and to rethink the 31st March deadline, there is no guarantee this will happen. And the home moving process is an uncertain one at the best of times.
If you are buying, you should cost in the additional stamp duty rate in the event you complete after the 31st March 2021 and make sure you have a contingency to make that payment. Sellers may also want to check their buyers could afford the additional tax if this did happen. When push comes to shove, if you need to pull out of the transaction, both parties can legally do so without financial consequences before exchange of contracts.
Will keep an eye out for any announcements over the coming weeks, lets see if my prediction plays out…
Stay safe everyone.
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