Stamp Duty holiday advice for clients
This article is now out of date following the Chancellor's announcements in the budget on 3 March 2021. Please contact one of our residential property lawyers for advice on the current position.
Many of our conveyancing clients are concerned about the current Stamp Duty Land Tax holiday coming to an end and whether their purchase will complete in time. Read on for our general advice to clients.
We appreciate that all parties are keen to progress their purchase as quickly as possible, and even more so in light of the changes announced to the Stamp Duty Land Tax regime by the Government in July 2020.
Stamp Duty Land Tax is currently not payable on purchases up to £500,000, or if you are purchasing a second home a flat rate of 3% is payable up to £500,000. This can mean a substantial saving and we completely understand the desire to make the most of this opportunity.
As you may have heard in the news, these Government changes have resulted in a significant increase in activity in the property market. Nearly everyone involved is finding it challenging to maintain their usual turnaround times. From mortgage providers being able to issue mortgage offers in good time and surveyors undertaking surveys, to the time required for personal and official local authority searches. Solicitors, like ourselves, are also dealing with much higher volumes of emails, telephone calls and enquiries.
It remains to be seen whether the Stamp Duty Holiday will come to an end on 31 March 2021, and in the absence of any decision to the contrary we must assume that it will.
It is therefore important you are aware of and consider the following if you are moving home.
- We will do our best to progress matters but buying and selling residential property is a process involving many parties and we cannot control the speed of the transaction. We cannot guarantee that transactions will complete before 31 March 2021. This is especially so where the transaction forms part of a chain.
- We can only move forward to exchange and completion when we have all the information and documentation we require. This may involve information requested from you or third parties. We cannot determine how long third parties will take to respond to us. It would greatly assist us if you could deal with all requests for information as promptly and fully as you can.
- You need to consider what you will do if your transaction does not meet the 31 March deadline. Do you have the funds to still proceed with the purchase and pay the Stamp Duty Land Tax? If not, you should not proceed to exchange of contracts or agree a completion date which falls after 31 March 2021. Even if you have the funds to proceed, others in the chain may not and the matter may not proceed in any event.
- There is a risk that you could exchange contracts but not complete on the completion date. If this happens the completion date may slip past 31 March 2021 and you will become liable to Stamp Duty Land Tax. This could occur if, for example, completion is delayed due to lack of funds being available, mortgage funds not being released in time or someone in the chain being unable to move due to any Covid-19 restrictions in place at that time. Our firm may decide to only deal with completions up to a certain date to avoid this happening.
For further advice and guidance please email your conveyancer or a member of our conveyancing team.