How to complete quickly before the stamp duty deadline
Mon 26 Oct 2020
Paul Bennett, Director
You may have read in the news that the ‘window of opportunity’ for a zero or reduced stamp duty bill is closing. This ‘window of opportunity’ refers to the optimum buying period that gives purchasers enough time to complete before the 31st March 2021 deadline. Although that date sounds quite far in the future, transactions can take three to five months to conclude.
Those wishing to avoid a stamp duty bill altogether (homes bought for £500,000 or less incur zero tax) or benefit from a £15,000 saving (on purchases of £501,000 or more) should aim to have an offer accepted by the end of October 2020 to stand the best chance of completing in time.
The current situation – with substantial tax savings, a tightening of the mortgage market for those with small deposits and many people moving to accommodate changing priorities - means high volumes of purchases are being pushed through. Conveyancing solicitors and mortgage lenders are just as busy as estate agents and as a result, there may be some delays that could push the completion of winter sales beyond 31st March 2021.
“Anyone sitting on the fence about moving should make their final decision now if they want to benefit from the stamp duty holiday,” comments Paul Bennett at Behr & Butchoff. “Speed is of the essence and we’re here to help those last-minute buyers and sellers make decisive decisions. If they delay, they are cutting it fine in order to qualify for any stamp duty discount.”
In addition to buyers qualifying for a reduced stamp duty bill, overseas buyers – who can also take advantage of the current tax freeze – are racing against an additional deadline. The Chancellor will be adding an extra 2% stamp duty surcharge on UK property purchases made by international buyers from 1st April 2021, and many global investors want to avoid this.
“There really is a frenzy of activity in the current London market,” adds Paul, “but movers keen to complete before the March 2021 deadline can help themselves by following our 5 golden rules. There is some competition in the market – something we haven’t seen for a while – so those in a position to move quickly will carry an advantage.”
The Behr & Butchoff team has the following advice:-
Have a defined search criteria: Buyers should be clear about the type of property they want to purchase so they narrow down their search but they should also be willing to compromise if they haven’t found a property by Christmas. Once a home is found, an offer should be made without delay.
Try and keep buyers onside: Sellers should accommodate viewings as quickly as possible or even better, give a set of keys to their estate agent. If time is really slipping away, sellers could potentially accept a slightly lower offer on their property so they don’t risk losing their buyer and having to start again from scratch.
Be mortgage ready: If a buyer needs a mortgage to finance a purchase, proof of a deposit - at least 15% or 20% - and a mortgage agreement in principal will put them in the strongest position possible. Having all necessary paperwork in order – photo ID, wage slips, bank statements and SA302 tax calculations – will help speed up the financing stage.
Keep chains short: it’s often the logistical side of moving that adds time to a transaction but a short chain can shave weeks off of the process. Selling to a first-time buyer or a cash buyer with no chain below can help speed things up, as will buying a new build property, a vacant property or a property with no onwards chain.
Keep up with conveyancing: Both buyers and sellers should be prompt in instructing a solicitor. All parties should answer queries quickly and return signed paperwork without delay. Where possible, movers should opt to receive communication by email, complete paperwork online and make the most of any e-signature facilities.
If you would like to buy, sell or invest in a London property before the 31st March 2021 stamp duty deadline, contact the Behr & Butchoff team.