Conveyancers fear unrealistic stamp duty expectations
Legal professionals and firms working in the property sector are facing another avalanche of conveyancing work. People who want to complete a house sale or purchase need to complete the transaction before the March 31st deadline to take advantage of the stamp duty holiday. Under the temporary rules, the chancellor raised the minimum stamp duty threshold from £125k to £500k, meaning that stamp duty does not apply to property purchases under £500k. For purchases over this amount, only the amount over £500k would be taxed.
Property solicitors have called for the deadline to be extended but this has so far been resisted by the government. It has been confirmed that MPs will again debate extending the holiday further on February 1st. The Law Society has requested that home buyers and sellers keep their expectations around the feasibility of completing transactions realistic.
They have warned that at this point in the year, the likelihood that they will be able to complete the transactions before the March 31st deadline is increasingly slim. They are urging their members to have honest discussions around this with clients, as they are concerned that people may lose money and be left disappointed if they are still required to pay stamp duty when their completion takes place after the deadline.
How many current transactions?
Rightmove estimated as many as 100,00 buyers who were aiming to beat the deadline and save the cost of stamp duty after conveyancing costs will be left not only disappointed, but with a hefty bill they weren’t expecting to receive.
Law Society President David Greene believes that the stamp duty holiday has confused the situation and created undue pressure for solicitors who are battling to beat the stamp duty deadline for their clients, in an already buoyant conveyancing costs market.
He urged Law Society members to discuss their clients’ expectations and their feasibility upfront, to manage any disappointment that may follow. The client and solicitor should agree a contingency plan together in the event that their transaction does not go through before the March 31st deadline.
Property sales and purchases are always delayed or accelerated by lots of different factors. The average time to complete a house purchase in the UK varies. With no chain, the minimum time is usually around eight weeks, but if there is a chain it can take up to six months or even longer.
With the number of transactions currently waiting to be processed being so high, people are urged not to start a new transaction now. If the only purpose of buying now is to beat the stamp duty deadline, potential buyers are urged to wait and see what happens. The situation is exacerbated by the fact that the Help to Buy scheme is also due to cease in its current form on the same date.
The government has been asked to consider either extending the holiday or putting in place a transition period to assist in reducing the current pressure on all involved.