Partners in a partnership would be well advised to keep comprehensive documentation at every stage...
Back in July the Chancellor, Rishi Sunak, announced a temporary stamp duty land tax (SDLT) 'holiday' which was intended to stimulate the housing market. The government temporarily increased the stamp duty threshold to £500,000 for property sales in England and Northern Ireland, until 31 March 2021.
This means that anyone completing the purchase of a main residence costing up to £500,000 before then will not pay any SDLT, and more expensive properties will only be taxed on their value above that amount.
This measure can save buyers up to £15,000 if they are buying a property of £500,000 or more.
It was intended to help buyers negatively affected by the coronavirus crisis and also to boost a property market brought to a temporary standstill by lockdown measures.
It certainly has had the desired effect. The August 2020 RICS UK Residential Survey results show ‘strong momentum with house price inflation now accelerating sharply’ and Nationwide Building Society reported that the average UK house price rose above £225,000 for the first time ever in its latest September index, rising 5 per cent year-on-year to £226,129.
Some of this is down to pent-up demand following the reopening of the housing market in May combined with the SDLT ‘holiday’, but there is also evidence that people are reassessing their housing needs following a period of life at home in lockdown. 83% of respondents to the RICS survey anticipated demand increasing for homes with garden space over the next two years.
First time buyers may not be able to take advantage of savings to the same degree as those already on the property ladder since mortgage lenders are generally more cautious and requiring higher deposits.
So if you intend to move during the SDLT ‘holiday’, you should act swiftly to avoid disappointment.
If you are hoping to purchase a residential property and take advantage of the current SDLT savings you need to be aware that the clock is ticking for completion prior to 31st March 2021. It's not just about you being ready to act - there are many external factors which could cause delay to your transaction, such as mortgage offers, searches and surveys - all of which are taking longer than ever, and if you are in a chain the risk is multiplied. A number of factors may put pressure on the system as the deadline looms. Increased demand has coincided with delays and backlogs at the Land Registry due to COVID19 and responses to local searches are already taking longer. The possibility of further lockdown measures may also cause delays where buyers are in a chain.
Those with pressing reasons to move will continue regardless of SDLT deadlines, but those timing their purchase purely to achieve the saving may even pull out and break chains as they realise they will miss the deadline. A house purchase is an exciting and major life event so it's best to go into it with eyes open.
