If you are in the process of buying a property, you may have considered whether you will be able to take advantage of the stamp duty holiday, allowing you to save up to £15,000 on your property purchase. In this article, we look at the possible extension of the stamp duty holiday and the potential impact for buyers and sellers on how transactions will proceed.
Stamp duty holiday – demand and delays
The stamp duty holiday was introduced to stimulate the property market and means that until the end of March 2021, the level at which stamp duty is charged on a residential property has been raised to £500,000. However, arguably, the scheme has been too successful, putting pressure on the industry as more people race to take advantage of the tax break.
Coupled with operations restrictions, the stamp duty holiday has slowed almost every part of the conveyancing process. Surveyors, mortgage lenders, search agencies and conveyancing lawyers are struggling to meet demand which means that the average property transaction completion time has increased from 12 weeks to 16 weeks. As a result, new buyers are unlikely to meet the March 31st deadline to take advantage of the stamp duty holiday.
Will the stamp duty holiday be extended?
The government has stated that it has no plan to extend the stamp duty holiday long term but may extend it by six weeks to account for delays in the process. However, during the pandemic, the rules often change at the last minute. There have been suggestions that the Chancellor could allow transactions which have passed a certain point in the process to continue without the buyer being liable to pay stamp duty even where they exceed the March deadline. Further tax announcements are expected as part of the Budget, scheduled for March 3rd.
What can buyers and sellers do?
There are several things that both buyers and sellers can do in the meantime to ensure their property transaction moves and efficiently as possible.
Instruct a solicitor. Buyers should instruct a solicitor as soon as an offer is accepted, and sellers should instruct a solicitor as soon as their property is listed.
Get an Energy Performance Certificate (EPC). This is required by law, and you may still need to get one. You should also gather other paperwork, such as planning permissions and compliance certificates from any works done.
Sort out a mortgage in principle. Before you make an offer on a property, start the mortgage process. Many lenders are experiencing delays, and mortgage options are fewer – particularly for first-time buyers. Get a head start. Consider time for searches. Many local authorities are struggling to keep up with the demand for searches. You may wish to discuss using a private company via your solicitor.