One of the first measures introduced by the government last year, as things gradually began to reopen following the first lockdown, was the stamp duty holiday. The thinking was that by removing the tax burden from the first £500,000 of any purchase, it would give more would-be buyers a helping hand in kicking off their hunt for a new home.
I’m not sure even the most optimistic members of the Treasury team would have predicted quite how successful the stamp duty holiday would be at boosting purchase activity. Data from HM Revenue & Customs shows that in April transaction numbers were up by 175% on the same point in 2020. Obviously, the pandemic had a big impact on purchases last year, but that’s still an incredible jump.
That rise in purchase interest has led to extraordinary house price growth too, with the Office for National Statistics reporting that average prices have rocketed by 10.2% in the year to March, the highest rate of annual growth seen since 2007.
In fact, the stamp duty holiday was so successful that it swiftly became clear that the backlog of buyers trying to get their mortgage finance sorted was big enough that some would end up missing the original deadline of 31st March, meaning that the purchase they had been dreaming about would instead involve an unpleasant tax bill.
Understandably, Rishi Sunak, the Chancellor of the Exchequer, elected to avoid that by extending the stamp duty holiday, and then phasing it out rather than keeping the same sort of cliff edge deadline.
However, that first deadline is almost upon us, and should act as a warning call for brokers and their clients who have cases that are nearing the finishing line.
From 30th June, the stamp duty holiday threshold will drop to £250,000. No problem for those buyers snapping up properties below this level, but given the way house prices have rocketed over the last 12 months, that’s an increasingly small number of purchases.
It can be easy to take a relaxed approach to this deadline. It’s at the end of the month after all, leaving plenty of time to get cases over the line. But the reality may be rather different.
Firstly, we have half term to contend with. The market inevitably slows over this period as people have to take time off to look after their children. From lenders and surveyors to advisers and clients, our attention may be elsewhere during the school holidays, and that can lead to delays in getting the required documentation completed promptly.
There’s also the small matter of the 30th June falling on a Wednesday. This might not seem like a big deal at first, but we need to remember that mortgage lenders often need five working days in order to release the funds needed for that purchase. That means that really all of the paperwork, like the certificate of title, needs to be completed and ready to go a week before the deadline.
Suddenly that deadline that is a month away starts to look a little closer.
Thankfully, there are plenty of measures that proactive advisers can take to give pipeline cases a helping hand and ensure they complete well in advance of the stamp duty deadline.
A good example is picking the right panel manager, as this ensures that you will have a selection of experienced conveyancers to choose from who understand the looming deadline your client is up against and can put their expertise to use in beating it.
Advisers are renowned for an excellent eye for detail – it’s a crucial asset when comparing different mortgage products or affordability criteria. But it can be put to use with the documentation from the client too, ensuring that the names of joint buyers are in the correct order or that the details exactly match the proof of ID. Establishing the documentation is entirely accurate at the outset is a surefire way to avoid unnecessary delays which could scupper a purchase.
Making full use of technology on offer can make a huge difference too. One of the driving reasons behind developing our DigitalMove platform was to improve the transparency of the conveyancing process, so that clients are fully aware of what’s going on and whether they are causing any hold ups. Encouraging clients to really engage with these sorts of features can only aid in a case’s progression.
Time is clearly of the essence for advisers and their clients who need to complete cases by the end of the month in order to avoid a stamp duty bill. But by taking a proactive approach, advisers can ensure that the purchase goes through on time.
Karen Rodrigues is sales director at eConveyancer