On 8 July 2020, Chancellor Rishi Sunak announced that a temporary Stamp Duty Land Tax (SDLT) holiday would be in place until the end of March 2021, covering all transactions taking place in England and Northern Ireland. It meant homebuyers could save up to £15,000 by not having to pay the tax on the first £500,000 of a property’s value.
The response was immediate. Estate agencies recorded a spike in buyer enquiries, resulting in rising transactions and house price growth. This was welcoming news for the Government given the relief was put in place to encourage property investment during the pandemic. However, reflecting nine months on, the SDLT holiday has posed challenges that have not been as widely reported. Conveyancers and legal firms have been inundated with cases, and this has increased the amount of time it is taking for contracts to be exchanged.
The pressure was apparent in the lead-up to the 2021 Spring Budget. At the time, the SDLT holiday was nearing its end, with both buyers and sellers rushing to get transactions finalised before the deadline. According to The Telegraph, 100,000 homebuyers were at risk of being caught in a “completion trap”, with a backlog of half-completed deals at risk of not being completed on time.
As it happens, the Budget confirmed that the SDLT holiday would be extended until the end of June. On top of this, the tax free SDLT threshold will be doubled to £250,000 from 1 July to 30 September for residential properties, before once again returning to the standard rates thereafter.
In one respect, the extension of the SDLT holiday seemed inevitable. Had this not occurred, thousands of prospective buyers in the middle of a transaction would have missed out due to factors beyond their control. Ultimately, this could have resulted in property transactions collapsing.
However, the challenge still remains. An in-depth analysis of public data by GetAgent.co.uk revealed that the total time to sell a property – from the initial listing to the completion of the sale as recorded by the Land Registry – is now sitting at an average of 295 days.
A three-month extension does provide some relief for conveyancers and legal firms. Yet, with buyer demand mounting and the new deadline less than 10 weeks away, it is likely that more buyers will be stuck in a completion trap and risk missing out on the tax relief.
Embracing technology to manage demand
Clearly, conveyancers will be feeling the pressure in the months ahead. As with any line of work, high demand and tight deadlines can increase the chances of human error occurring. It can also lead to confusion and frustration amongst those parties involved in transaction. And, of course, stress on professionals can damage their mental wellbeing. These are all factors we must consider carefully.
Positively, there are ways for conveyancers to reduce stress and ensure as many sales as possible can be completed before the SDLT deadline. One of these solutions is the adoption of conveyancing technology, which is radically transforming how contracts are being exchanged in the UK.
This trend has been apparent since the beginning of the COVID-19 pandemic. Since the first nationwide lockdown, firms have come to realise the benefits of (if not the fundamental necessity for) conveyancing technology as a means of promoting efficient practices and transparent communication. These advantages include streamlining and automating time-consuming processes so that conveyancers can deliver a superior service to their clients.
A big development in this regard is the HM Land Registry accepting witnessed electronic signatures. Indeed, just two days after this was introduced on 27 July 2020, the first property deeds to be signed electronically were submitted by The Partnership, a leading property solicitor, using InfoTrack’s SignIT eSignature solution supported by DocuSign technology.
The replacement of the traditional ‘wet signature’ with eSignatures has sped up the property-buying process. To put this into perspective, over two-thirds (67%) of SignIT transactions are returned within 12 hours, well before the forms could even arrive by post.
Through these examples, there are clearly ways that conveyancers can overcome some of the immediate challenges they face by embracing the technology. While many have been doing so, it is important the industry as a whole encourages all conveyancers to adopt accessible digital solutions to manage their mounting workloads.
Doing so will not only help them ease the bottleneck of sales that is likely to form as the SDLT holiday deadline approaches ever closer. It will also ensure the industry takes full advantage of technology to reduce the unnecessary complexity, time delays and stress that can occur when managing the exchange of contracts. Indeed, this could be a long-term benefit to come from the pandemic.
Scott Bozinis is the CEO of digital conveyancing firm InfoTrack UK