With 12 days to go until the June 30 stamp duty holiday deadline, thousands of homebuyers are scrambling to bag their cut of the maximum £15,000 saving. Miss it and the potential saving is slashed to £2,500 overnight.
About 200,000 house hunters look likely to miss the deadline when the threshold for the tax in England and Northern Ireland will drop from £500,000 to £250,000. Scott, 40, and Laura Slinn, 38, are determined not to be among them. The couple, who are moving, with their two young daughters, Amelie, two, and Evelyn, three weeks, from a £390,000 three-bedroom detached home to a £590,000 four-bedroom house in Southampton, will save £15,000 if they complete by June 30.
The Slinns have a draft completion date of June 25, but delays elsewhere in their chain of four are worrying. “We haven’t got our exchange of contract sorted yet, so I am starting to panic,” says Scott, an IT consultant.
The couple had their offer accepted on their new home, after missing out on several other houses, about two months ago. “It has been tricky, with sellers only wanting people to view who have sold or have their house under offer,” Scott says. “I also lost my job at the beginning of the pandemic, so we had trouble with the mortgage — we switched to an online broker, the Mortgage Hut, which was more flexible than the conventional banks. I started a new job six months ago, we have a small baby and we’re trying to move house by June 30. It’s a lot.”
Scott says that if they miss the deadline they will “suck it up”, but adds that he is worried that others in the chain might not be able to. “I’m worried if we miss the deadline our chain might collapse. What if our buyer or their buyer can’t miss the deadline?
“Of course we will miss the money. We have bought a place that needs some work and we plan to use the £15,000 saving to put in a new kitchen, but we are committed and would continue because it is a family home in the catchment area for a good school and we want to stay there some time.”
While many will do as Scott did and absorb the lost saving — a survey of 750 prime property buyers by the estate agency Savills shows that 10 per cent would look to renegotiate on price and 5 per cent might choose not to proceed — for those less well off there maybe little choice but to pull out. In the first half of this year close to 145,000 agreed sales fell through, according to TwentyCi, a property analyst. This could escalate if buyers who miss the deadline cannot afford to lose the tax saving.
Jeremy Leaf, a north London estate agent, says: “Our customers on tight budgets are telling us that if they are unable to negotiate a discount at, or close to, the financial benefit they are receiving by being able to complete by the end of June, they may have no option but to withdraw. The stamp duty saving for them makes the difference between buying and not buying.”
So, what are your options if you risk missing the deadline?
Hannah Aykroyd, the managing director of Aykroyd & Co estate agency, says: “Communication is key and every hour matters — is your team prioritising you and your purchase? Introduce everyone on email — lawyer, banker/mortgage broker — so you’re all working properly together and everyone is updated ASAP.
“If your purchase has been passed to a junior, ensure the senior partner of that team is being copied in. Due to Covid we’re seeing less experienced members of legal teams getting stuck on points and importantly are not sitting in the office with their team easily to sense-check an issue. Really push to understand exactly what is outstanding, who is responsible for obtaining this information and whether you or the sales agent can carry out any due diligence to help.”
Marc Schneiderman, a director of Arlington Residential estate agency, suggests compromising where you can if you can. “Take a view on points that are not really that important. Delays in completing because you are waiting to hear from the seller’s solicitors with answers to questions that in the long run just don’t matter could cost you thousands.”
The cut-off date for receiving a certificate of title to complete by the end of the month with mortgage lenders varies. For instance, it is June 21 for HSBC, and June 23 for Barclays Bank. The time it takes for local authority searches varies widely. The Land Registry offers a free fast-track service with turnaround times of about ten days where “a delay would put a property sale at risk”. The Land Registry has begun digitising local land charges so you can get some information such as planning consents, smoke control orders and conservation orders immediately online for £15 — areas online include Lambeth in south London, Sevenoaks in Kent, Warwick, Milton Keynes in Buckinghamshire and Carlisle in Cumbria. Check whether your area is online at search-local-land-charges.service.gov.uk.
If it is impossible to get a search done in time, consider “no search indemnity insurance”, which costs from £45. In fact, there is insurance against most of the things that can go wrong. Schneiderman explains: “An indemnity insurance policy protects you from a specific potential problem. For example, if you are buying a property and the seller cannot provide a building regulation certificate, then — and only with your lawyer’s approval — you might be advised to take out an indemnity policy to cover potential costs. This will cover any costs in the future if your local authority pursues a claim because you don’t have the certificate. There are many different types of policies available for a myriad of issues, such as chancel repairs, Fensa certificates and rights of access.”
“Some vendors are having difficulty in finding removals in time due to the sheer volume of transactions that are looking to complete,” says Jamie Hope, the managing director of Maskells estate agency. If the vendor is unable to give vacant possession in time, it could be worth looking at a ‘licence to occupy’, although your lawyers will need to advise on this to ensure there are no negative implications with any mortgage lender.”
Baljit Arora, the managing director of Orlando Reid estate agency, says: “You should communicate with your agent if you won’t be able to afford the property should you fail to complete before the June deadline. They maybe able to offer a solution such as a price reduction — if you have a willing vendor. Just waiting and hoping that completion will take place in time may result in the sale falling through altogether.”
Ashley Wilsdon, the head of London buying at Middleton Advisors, agrees. “Our advice is that if you’re likely to miss the deadline, don’t rush the due diligence, but instead have a negotiation with the seller. Reduce the price if the deadline is missed on their side or agree to split the amount if the delay comes from the buyer’s side.”
“Sharing the cost of the stamp duty difference across the chain is being mooted in some cases,” Leaf says. “We have had cases where everyone down the line gives £500 or £1,000, depending on the number of people in the chain and the potential saving, to ensure the deal goes through. It is like Russian roulette and we anticipate a few games of this as we get closer to the cut-off point.”
Alternatively the chain could help in other ways. Chris Hodgkinson, the managing director of HBB Solutions, a house buyer, says: “We typically buy with a discount or alternatively charge a fee, starting from as little as 8 per cent, for our service. But that cost doesn’t have to be absorbed by just the one seller. It can be negotiated across the entire chain to make it affordable and keep the sale of every house together.”
And if you miss the deadline, all is not lost.
As Tomer Aboody, a director of the property lender MT Finance, says: “With house prices increasing at levels not seen in years, even if buyers miss the deadline and have to pay stamp duty, the increase in value of the property going forward could well outweigh this outlay.”
England and Northern Ireland
£500,000 until June 30
£250,000 July 1 to September 30
£125,000 from October 1
First-time buyers: £300,000 on property valued up to £500,000 from July 1
£250,000 until June 30
£180,000 from July 1
No first-time buyer exemption
£145,000 from March 31
First-time buyers: £175,000