A law firm wants the government to agree that properties that have exchanged but not yet completed can definitely benefit from the stamp duty holiday ending on March 31.
Collyer Bristow says this - or a full-blown extension to the SDLT holiday - would ensure the current backlog of transactions can be dealt with fairly.
The firm says there’s been a sustained period of unprecedented demand on conveyancers, surveyors and lenders; this is likely to result in many homebuyers missing out on the holiday through no fault of their own.
Janet Armstrong-Fox, partner and head of private client property at Collyer Bristow, says: “The residential property market remains exceptionally busy at all levels, with the demand on property lawyers and surveyors particularly acute. The lockdown throughout the spring, traditionally a busy period for the residential market, and the SDLT holiday is driving that demand.
“Buyers are already being asked to ensure they have a surveyor and solicitor on board to see the transaction through, and if they don’t their offers are being turned down.
“The delays do not, however, just sit with the solicitors or surveyors. There are many steps in the conveyancing process from local authority searches taking many weeks to complete, to mortgage offers taking twice as long to be processed, translating into weeks of delay."
Armstrong-Fox goes on: "As it stands, any transaction that hasn’t completed by March 31 will fail to qualify for the SDLT relief, and that is likely to result in sales falling through.
“We would urge the government to consider extending the SDLT holiday or, if that is not viable, to allow sales that have exchanged, but are yet to complete, to qualify.”
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An interesting idea, but (and playing Devil’s Advocate) won’t that just lead to a rush to exchange and, requests for all kinds of conditional contracts. For example:
Subject to Mortgage
Subject to Searches
Subject to obtaining the missing S.106 Agreement
Subject to obtaining an EWS1
Etc
Etc
I never understood why the holiday was based on date of completion not date of sale. A buyer and seller are legally obligated to complete a transaction at a determined price following exchange (not conditional) - its most unfair for the committed parties to then be subject to a variable beyond their control that could mean as much as £15000 more needs to be found. Deals Exchanged should always be the way - just as it was years ago when Stamp duty was changed from the flat 1%.
I guess the difference this time is that is is going from £0 to SDLT for many transactions rather than 1% to something more.
Since in the ordinary course of things 90% of exchanges are within 10 days of Completion, Rob above is right: this would lead to manufactured, premature exchanges with a great deal of conditionality. Nothing wrong with that in principle but it would do nothing to speed up transactions, just create an even bigger bottleneck. In my view firms should be looking at search insurance products and other means that they can use to expedite transactions.
Agree David. In any event, all exchanges are conditional already. There are a host of standrard conditions and a few special conditions in all contracts.
The 28 day exchange to completion norm of years gone by, would have been helpful, but the fella's who have already commented about completions following exchange by just a few days are spot on accurate.
5 or 10 days extra can't really help the frustrations that are sure to arise -- The ready to exchange FTB who can't make the 31st March because 2 up the chain searches are awaited. The media will be all over that one and rightly so.
On the basis of additional delays caused by this latest lockdown, it would be wholly justified to introduce a ' breathing space ' backstop of 30th June plus ( as I'm sure the industry are anxious for ) a Chancellor's review of a better stamp duty system -- one that, perhaps, supports the first time buyer or the price range they buy in. Up to £350k ?
I would be very surprised if Rishi Sunak isn't on to this inevitable problem & early in the New Year ( hopefully sooner ) an appropriate announcement will be made.
The extension to first time buyers won't necessarily help the can, this has enabled people would normally not be able to upsize to move and older sellers to move and provide more in their retirement
Most are sims currently or just a few days as that is what has been encouraged, an extension until the end of the year is what is needed really to take away the pressure point
This idea would not solve anything. Agents would be doing deals in February and promising buyers and sellers they will get it exchanged without actually being the ones who can control it. One possible solution is any sale agreed with contract issued by end of March which completes with that buyer qualifies. Solicitors must be able to evidence this.
"Any transaction that hasn’t completed by March 31 will fail to qualify for the SDLT relief." Why is it so? Isn't it creating complications?
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