Most of us are aware that earlier this year Chancellor Rishi Sunak temporarily increased the threshold at which Stamp Duty is paid to £500,000 meaning that those buying a property will pay nothing on the first £500,000. In other words, a Stamp Duty Holiday as it is popularly known!
For many buyers, therefore, this amounts to a saving of some £15,000, not to be sniffed at!
This is due to end on 31st March 2021 potentially causing a stampede of property buyers looking to complete by this date.
The Stamp Duty charges currently are as below:
|Property value||SDLT rate|
|Up to £500,000||Zero|
|The next £425,000 (the portion from £500,001 to £925,000)||5%|
|The next £575,000 (the portion from £925,001 to £1.5 million)||10%|
|The remaining amount (the portion above £1.5 million)||12%|
However, anyone who is purchasing a second property or more will still have to pay the additional property surcharge of 3% on the total property value.
Hence the below figures:
|Property or lease premium or transfer value||SDLT rate|
|Up to £500,000||3%|
|The next £425,000 (the portion from £500,001 to £925,000)||8%|
|The next £575,000 (the portion from £925,001 to £1.5 million)||13%|
|The remaining amount (the portion above £1.5 million)||15%|
We are already seeing that some lenders and conveyancers are experiencing delays due to a rush of business and because of issues obtaining local searches from some councils.
Lenders themselves are still struggling with capacity brought on by their staff working from home and call centres still closed, so it has become important, especially if you are just agreeing on a property sale, to get advice from a broker who will know which lenders are able to process a case through quicker than others.
As usual, those lenders with the lowest rates may well have the longest processing times due to the sheer weight of business they are taking in.
That said, a well put together application through the right lender can still proceed quickly but there is little time if there are any unforeseen issues with, for example, the property valuation or the lender asking for more information.
The biggest issues are now occurring at the conveyancing stage, especially where some councils are concerned with the time taken to obtain their Local Searches.
Some conveyancers are already seeing bottle-necks occurring and with some reports suggesting there are North of 650,000 sales agreed subject to contract that want to complete by the end of the Stamp Duty Holiday on 31st March, you can understand the concern.
As a result, property industry groups have written to the Chancellor to see if there is any way those already in the buying chain could have some kind of extension of the Stamp Duty Holiday to avoid an awful lot of anger and a cliff-edge event.
So far this plea seems to have fallen on deaf ears, but in politics, you never say never.
Quite simply it’s all about preparation. Work with a broker, get all your documentation in order immediately, and instruct your solicitors to handle the conveyancing and get the work underway.
There are risks with this, however, as all the costs you have paid will be non-refundable should you not be able to pay for the total Stamp Duty to complete your purchase for the reasons above.
Having the triumvirate of a good estate agent, a good solicitor, and a good broker working with you will boost your chances, but coming on the back of the Covid-19 issues, nothing is guaranteed.
Given the extended average time between sale agreed and completion, you may be unexpectedly liable for Stamp Duty at the previous rates.
You should therefore ensure that you can cover this additional cost if the Stamp Duty Holiday deadline is missed. For further information please contact your solicitor or a member of our team.
We will of course do all we can to smooth the process and get your mortgage offer out as quickly as possible but believe now is the right time to bring this to your attention so you can plan accordingly.
The good news is that lenders are at least starting to improve, with more applications going through quicker and more choice across the market, particularly at higher Loan-to-values.
With the other trifling matter of Brexit still not resolved and at least another quarter before vaccinations reach a high level, interest rates themselves do not look like they will be going anywhere for some time yet.
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 1.18%, (3.00% APRC) and 5-year fixes from 1.35%, (3.30% APRC) whilst variable tracker rates are available from 1.57%, (3.10% APRC).
Those looking at Buy-To-Let can now obtain products from 1.19%, (4.40% APRC) for 2-year fixed or 5-year fixes are available from 1.64% (3.80% APRC).
To speak to one of our friendly advisers, please contact us on 020 7220 5110 or send a message via our contact form.