Lessons learned from the SDLT cliff edge
Earlier in the year, we wrote a blog about the thousands of people who faced missing out on the Stamp Duty holiday, resulting in an industry "cliff edge" with many sellers worried their buyers will pull out if they didn't complete in time. But, it seems since the Chancellor extended the holiday, there have been some lessons learned.
According to property portal Zoopla, there are an estimated 225,000 sales that fall through each year, accounting for around 1 in 4 transactions. Reasons for fall-throughs are usually down to things like finances, chains breaking down, surveys problems or changes in personal circumstances.
However, Zoopla reported that prior to the original 31st March Stamp Duty deadline, 70,000 transactions would miss out on the savings, causing a concern for a spike in the number of estimated fall-throughs (source as before). They are also calling for more to be done to prevent buyers pulling out because it has a knock-on effect on the entire chain.
The Chancellor announced an extension to the Stamp Duty holiday in his Spring Budget and it was hoped to alleviate a "cliff edge" of transactions falling through. There were concerns that they could instead happen later on in the year with the new tapering deadlines, before Stamp Duty returns to its normal levels in October, particularly as transactions have doubled year on year between March 2020 and March 2021. However, the industry has been putting forward other solutions to help.
One such solution exists in the form of a ‘Home Review’ service offered by the Residential Property Surveyors Association (RPSA). This provides a snapshot analysis of key structural risks up front, warning buyers of any potential issues earlier on in the process.
Plus, most buyers coming to market now are also being warned by conveyancers, lenders and other institutions that their transaction may not complete in time and therefore must budget and prepare to pay the stamp duty just in case they need to pay it.
With measures like these in place, thanks to the lessons learnt from the first Stamp Duty deadline, it is hoped that there will be less of a surge in fall throughs later in the year.
We have been advising clients of the same regarding the Stamp Duty payment, especially as we are still seeing conveyancing work come in thick and fast. Whilst we endeavour to push forward as quickly as we can, we are also dependent on many other third parties involved in the conveyancing process. Not only is there a log jam due to the current surge in demand, but some local authorities in our geographical area are also struggling with the turnaround of searches. Many people involved are still working remotely due to the Pandemic.
If you are about to go through with a purchase, please do consider how these delays may affect your transaction and always budget for the worst-case scenario in terms of Stamp Duty should you be unlucky and run out of time.
If you would like any further information or advice, please contact the property team at Downs Solicitors for more information.