Moving home or even buying your first property is tough at the best of times.
But it has been turned into a nightmare during the pandemic.
That’s partly because the home-buying process has been lengthened by the workplace safety practices introduced during lockdown, with many of the people involved in the procedure working from home.
But there’s also been the surge in demand for property caused by the Government’s stamp duty holiday that was introduced last summer.
In July, stamp duty was suspended on the first £500,000 of all property sales in England and Northern Ireland to help boost the market.
For anyone spending £500,000 or more, that means a saving of £15,000, but even those spending less can save thousands.
An average of £4,500 in tax has been saved by those who can take advantage of the holiday.
So, it’s obvious why so many people have been tempted to accelerate plans to move or buy.
But there’s a fast-approaching deadline which means buyers are desperate to complete their purchases by March 31 or lose the generous tax advantage.
Not only that, many potential buyers may be forced to change their plans if they can’t complete in time.
Some will already be stretching finances to afford their home and the extra thousands of pounds they might need to find may well force them to scrap their move.
And that will harm other people.
Rishi Sunak announces changes to Stamp Duty with immediate effect
“There is real concern that the stamp duty cliff-edge on March 31 will cause many chains to collapse,” says Mark Hayward, chief policy adviser at trade association Propertymark.
“That will have a knock-on effect on the housing market and confidence from consumers in the buying and selling process.”
Londoner Adam is desperate to complete his purchase before the deadline arrives.
Adam, who works at a climate change organisation, says: “One of the reasons why we decided to buy now was that we would save £5,000 if we complete before the current stamp duty holiday finishes.
“My bank made it clear to me that if the property did not complete before the end of March I would need to pay an extra £5,000. So as part of the mortgage application I needed to explain where I would find the extra money, which was tough.”
With less than eight weeks before the cut-off, potential homebuyers may presume they have plenty of time to get everything sorted.
But that’s not the case as the pandemic has had a negative effect on the speed of the sales process.
Mr Hayward says: “Mortgage valuations and surveys are taking longer to be delivered due to the strict safety protocols being followed by these services.”
For Alison Shepherd, who works for a medical journal, the delays have meant being forced to rent while trying to buy a new home in Ramsgate, Kent, despite selling her old home in Broadstairs last August.
“I applied for a mortgage at the start of September but didn’t get an offer until the end of October,” she says.
“By then the original seller had pulled out so I had to find a new home and change the address on the mortgage application. That switch ended up taking until the end of November, so it took 12 weeks just to sort out the mortgage.”
Properties are currently taking an average of 29% longer to sell once under offer because of conveyancing delays, according to data analysed by property sales firm Movewise.
The research suggests that hold-ups caused by property searches and conveyancers dealing with a backlog of cases has seen the average time to exchange contracts once an offer has been accepted increase from 96 days before the pandemic to 124.
It means that anyone thinking of starting the process now may have very little chance of getting everything sorted before the March 31 deadline.
“Buyers who have made offers since the start of the year will probably have known that completing before the deadline would be a tight call, and that without fair winds they would likely miss it,” says David Westgate, group chief executive of Andrews Property Group. “So it’s prudent for any buyer making an offer now or in the coming weeks to assume they won’t beat the deadline unless it’s extended, which is unlikely, and make sure they have the money to cover the tax if necessary.”
Alison adds: “The whole process just seemed to take forever. My advice would be to double the time you think it’s going to take.”
She’s now hoping to complete next week and move in before the end of the month, but adds: “Buying a home has never been a quick process, but this really has been so slow.
“It’s been made worse by the stamp duty holiday, as some people have jumped at the chance to take advantage of it to leave London to move to the coast, which has hit those of us already in the area.”
There is an overwhelming number of transactions currently waiting to complete, according to Marc von Grundherr, director of estate agent Benham and Reeves. “It means that those currently buying are facing months of delays, particularly during the legal process,” he says.
That’s certainly the experience of Adam, who adds: “It is clear that conveyancers and solicitors are having a tough time.
“Emails requesting receipt of important documents seem to require two or three follow-ups, and our solicitor has a stock email response that they are very busy and everything is delayed.
“We checked them out thoroughly in advance and it seemed they have a strong track record of being swift at responding, so I’m giving them the benefit of the doubt that it really is due to a surge in applications.”
It’s not all doom and gloom for those rushing to beat the deadline, reckons Mark Harris, chief executive of mortgage broker SPF Private Clients.
“The mortgage market is open for business, with lenders awash with cash, even though deals are taking longer to process,” he says.
“Valuers are active and there has been greater adoption by lenders of non-physical valuations, which can help cut down the time it takes.”
He believes that with a good quality solicitor, there is still the opportunity to complete before April.
It may also be worth contacting the seller if you think there’s a chance you may miss the deadline.
“It’s better to address the elephant in the room at the start and negotiate with the seller, if needs be, before the sale has progressed too far,” says David Westgate.
“If the stamp duty saving is a few
thousand pounds, then it’s probable that a price can be agreed that is acceptable to both parties.”
That advice is echoed by Tom Scarborough of Movewise who said buyers making an offer now should negotiate a price on the understanding that completion is likely to be after the tax holiday ends.
“An honest and frank discussion upfront could avoid a transaction failing further down the line, after money and time has been spent on searches and surveys,” he says.
However, delaying a purchase until after the stamp duty holiday has passed could also work to a buyer’s advantage, according to estate agent Jeremy Leaf.
“There could be more bargains to be had after the deadline has passed,” he says, “because some of the heat will be taken out of buying activity.
“This could result in a softening of sellers’ asking prices.”
Article by Simon Read, The Mirror.