Understandably, as the end of March draws closer, there is a lot of focus on the stamp duty deadline, particularly with first-time buyers.
As we know, up until that date, first-timers have access to a more generous discount, with no stamp duty to pay on properties valued up to £425,000 and 5% payable between just over £425,000 and £625,000. That will then change to no stamp duty up to £300,000, and 5% on the portion between that and £500,000.
A first-timer buying a £500,000 property after the end of March is going to be paying £10,000 in tax, compared to £3,750 before the change. It is no wonder that, over the past few months, we have seen many first-timers seeking to get their purchases completed by the end of next month.
However, we should also be aware that all house purchasers, not just first-timers, are going to be impacted by a stamp duty shift, and we might argue there will be a greater impact across a larger cohort.
Again, someone buying a home valued at £295,000 prior to the change will pay £2,250 in stamp duty, whereas, from April, they will pay more than double, at £4,750.
How the housing landscape is set to shift
Sponsored by Halifax Intermediaries
Preparing buyers for a busier market
I noted the joint missive put out by both the Association of Mortgage Intermediaries (AMI) and Intermediary Mortgage Lenders Association (IMLA) recently on this very point, and it’s an important one to recognise given we are – at the time of writing – around 7-8 weeks away from the stamp duty change.
It spoke about the need to manage expectations with clients about their ability to get their purchase transaction completed prior to the end of March, and this is just as important for existing clients as it is for those who might come to you now thinking they can complete everything by 31 March.
Firstly, with existing clients, you do need to keep in regular contact with them. Communication is always key, but when there is an expectation of them completing before that deadline, then this becomes even more imperative. You would not want to be in the firing line if, come 1 April, there is a perception that you are somehow to blame for them missing this opportunity.
Now, let’s certainly hope that the deadline is not an issue, and they can complete and benefit from the lower current stamp duty rates. But let’s also be realists. As we get closer, it should become ever clearer whether this is likely, and if not, then you need to be in the ear of the client about this, and the potential options they have.
Working with conveyancers for the best outcomes
If you are working with a platform like Conveybuddy, and have placed your case with one of our panel solicitors, then the good news is that you have put your client in the best position possible. However, liaise with both the conveyancer and us regularly in order to know whether that completion time is still achievable.
Let’s be honest here; conveyancers are currently under significant pressure – as they always are with these government-imposed stamp duty holidays and deadlines – and they will be working on a significant number of cases with clients who all want to complete before 1 April.
Just being on top of the progress that is being made is likely to be a) appreciated by the client, and b) does give you an opportunity to prepare them for what may, or may not, happen.
Far better for you to be ‘in the loop’ on this than not, I would say. If you’ve no ‘eyes’ on the conveyancer the client has chosen, or if you’re not aware of where the case might be up to if you’re not working with a platform like us, your ability to get a positive outcome for the client is severely diminished, and might cost you future business and income.
If, however, you’ve placed the case with a conveyancer, you can talk through the options for a client if a completion looks unlikely. How many might decide not to progress the case is a moot point – my view is that most will want to continue having got into such a position – but, again, you will get that view from the client and be able to act upon it, and again having oversight of how the conveyancing is going does put you in a much stronger position.
Not everyone will complete in time
For new clients coming to you now, expecting a completion before March, one would have to think the chances are slim, and being generous, the door is certainly closing, and closing fast. Again, please chat to conveyancers about any potential for cases to make this deadline.
While the average time for most transactions to get to completion is around 20-22 weeks, in certain circumstances and with certain conveyancing firms, there is the chance to achieve a much shorter timescale. It is, however, likely to cost significantly more, and at this stage of proceedings, you might not get a firm willing to commit to this. So, once more, you can prepare the client for that.
Therefore, erring on the side of caution, here is the right approach: outline to the client that if they are intent on completing this transaction only within a pre-end of March timescale, then it’s likely they are going to be disappointed. Again, how does this impact their ability, want or need to achieve this purchase?
Knowing this puts everyone in a much stronger position and you and the client have full transparency.
Overall, it undoubtedly makes sense for you, the adviser, to be at the heart of your client’s conveyancing, to have made the recommendation and have the opportunity to review case progress regularly and be the communication conduit for what is happening. That is the same whoever the client is, so make sure you don’t miss this opportunity, both now and in the future.
