House-buyers rush to beat the end of the stamp-duty holiday
House-buyers are rushing to complete on their properties by 30 June, the end of the stamp-duty holiday.
The property market is facing the “biggest sales logjam in a decade” ahead of a stamp duty cliff-edge, says property website Rightmove. The threshold at which stamp duty land tax (SDLT) is charged on houses in England and Northern Ireland falls from £500,000 to £250,000 at the end of June.
Sales that complete just one day too late will be subject to an extra tax bill of up to £12,500. Buy-to-let landlords and buyers of second homes are also affected. For first-time buyers, the threshold will return to its pre-holiday level of £300,000. Wales will end a holiday on land transaction tax for purchases up to £250,000 on the same date.
Property website Zoopla estimates that more than 50,000 housebuyers risk missing out on the break because of conveyancing delays. It used to take an average of three months between sale and completion, but it is now closer to four.
To qualify, a sale must complete or be “substantially performed” (the purchaser takes possession of the property, or at least 90% of the consideration is paid or provided) by the 30 June deadline. Many buyers have agreed to pay inflated prices because of the holiday. Halifax says UK house prices rose by 9.5% in the year to May, the biggest annual gain in nearly seven years.
Solicitors, movers and surveyors are working flat out ahead of the deadline, say David Byers and Melissa York in The Times. Their rates are rising accordingly. Jeremy Leaf, a former chairman of the Royal Institution of Chartered Surveyors, says that “a full building survey for a three-bedroom semi-detached house” usually costs £1,100-£1,500. But firms are now charging “literally anything”. Removers are charging up to £2,000 for a four-bedroom house in London, compared with £1,200 normally. Many van-hire firms are booked up and there is “nothing to stop a person buying a Transit van today and calling themselves a removals expert tomorrow”, says Ian Studd of the British Association of Removers. Ask for qualifications or references before hiring a remover, or you could be “gazumped at short notice if the mover finds more profitable work. You might also have items damaged or stolen.”
There is still time
Buyers who have yet to exchange contracts will find it impossible to complete by 30 June, but they can still get some relief because the stamp-duty holiday is being tapered in England and Northern Ireland. Sales completed by 30 September will only pay the duty above £250,000. From October the usual threshold of £125,000 applies, bringing savings of up to £2,500.
To speed up the process, says Ed Magnus for thisismoney.co.uk, instruct a solicitor as soon as possible. Get paperwork ready: anti-money laundering rules mean you need a solid paper trail showing the source of your deposit. Leasehold properties take longer to close than freehold ones as the seller needs an “information pack” from the freeholder.
Local authority searches, which provide buyers with information about the local area, can take up to six months in some areas. It is possible to pay for a “personal search” firm to speed up the process. If the search is still delayed, the “nuclear option” is to “go ahead with the sale anyway and take out search indemnity insurance to cover any costs that might come up as a direct result”. But be careful. Later discovering there is “something seriously wrong” with your new house is hardly the best moving-in gift.