The property market is undergoing a period of significant activity since the regulations relating to Stamp Duty Land Tax (SDLT) were temporarily changed on 8 July 2020. The threshold for residential property purchases was raised to £500,000 and these temporary provisions comes to an end on 31 March 2021.
In residential property transactions in England and Northern Ireland, if the price paid is up to £500,000, in most circumstances there will not be any SDLT to pay. The change to the rules by Her Majesty’s Revenue & Customs (HMRC) has created a huge demand, understandably, for property transactions and there is currently some 9½ weeks until the SDLT holiday comes to an end.
While the change to SDLT rules (and to some extent the current national situation with regards to the pandemic) have resulted in demand driven activity in the housing market, this has created its own set of issues which are now more focused as the deadline of 31 March 2021 approaches, of which all parties involved in the housing market should be made aware.
The primary issue is the expectation of purchasers in buying a property to complete on or before 31 March 2021. While the vast majority of practitioners will have a conversation with prospective clients to advise them of the likelihood (all things being equal) of their particular transaction completing by this date, the earlier this conversation takes place, the better. The client should be made aware that while endeavouring to ensure the transaction does complete by the end of the SDLT holiday, this cannot be guaranteed due to numerous factors beyond the control of solicitors/conveyancers.
It is worth appreciating that the average time for a residential property transaction to complete is between 12 – 20 weeks.
There are numerous factors which can speed up a property transaction and they include:
- the parties having a property in mind they want to purchase with an offer that has been accepted by the agent on behalf of the sellers
- an early decision on who instruct to represent them in the transaction
- having finance readily in place or at least a decision made in principle
- an early appointment to have a survey done on the prospective property
- ultimately a realisation that, for all the best plans, unexpected events can crop up meaning a satisfactory resolution will not be achieved in time to enable all parties being able to exchange contracts and complete the purchase by the end of 31 March 2021; and having a contingency for this.
What should also be borne in mind is that there are numerous parties involved in the housing market, ranging from the clients to agents, mortgage brokers, lenders, valuers/surveyors, insurers, search providers, removers and the Land Registry. All these elements have to work closely together and in some degree of synchronisation to progress a standard property transaction in a reasonable manner. All parties are experiencing a huge demand for the services they provide.
It is worth noting that even though there is now very little time before the end of the SDLT holiday, practitioners are still being instructed on sale and purchase transactions where the clients still have an expectation that the property transaction can complete before 31 March 2021.
Clients should always be advised that there is a possibility their transaction will not complete before the end of the SDLT holiday and, as a consequence, they should be prepared to put in place plans to pay a Stamp Duty Land Tax liability. This collaborative approach can best assist clients navigate their property transaction to the satisfaction of all parties.
We at Barrett & Co are continuing to take new instructions at this time and if you would like an estimate in respect to your sale or purchase, please do not hesitate to contact our residential property team at [email protected] call on 0118 958 9711 and we would be delighted to assist you further.
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