The first phase of the stamp duty holiday has ended, but you will still pay less stamp duty if you complete on a purchase before the end of September. But is this possible with the property market being so busy?
The first phase of the stamp duty holiday ended on 30 June. Buyers can no longer avoid paying stamp duty on the first £500,000 of a property’s value. However, you can avoid paying it on the first £250,000 of a property if you complete on a purchase by the end of September. Yes, that’s another stamp duty deadline to think about. If you are in the process of buying a property and you didn’t make the end of June deadline, you’ll undoubtedly want to meet the next one. From 1 October, the stamp duty nil rate band will revert back to £125,000, resulting in a smaller saving.
The exception to this is first-time buyers. If you’re buying your first property, you’ll pay zero stamp duty on the first £300,000 of the property’s price even if you complete after the end of September. That is unless the property you are buying is worth more than £500,000, in which case you won’t be eligible for first-time buyer’s relief and will have to pay stamp duty at the normal rates.
However, if you’re an existing homeowner in the process of buying, or you’re currently viewing properties, do you stand a reasonable chance of completing before the end of September?
It’s a loaded question, not least because there are so many variables. Our content manager Christina Neal was recently surprised to find that her house purchase took over three months to complete despite no chain. She made the stamp duty holiday by the skin of her teeth – another day would have meant missing the first deadline.
However, there were many purchases that did complete before the end of June and even some industry experts were impressed by the sheer volume of completions. ‘I think we were relatively surprised by just how many property transactions did manage to get through by the end of the month,’ says MB Associates’ Mortgage Adviser James Watson.
James adds: ‘I have seen some articles about the high number of people who missed the deadline, but personally from what we’ve seen at MB Associates, and the solicitors we’ve worked with, 95 per cent of transactions made it across the line in time. Six months before the deadline, I had people beginning the process of buying and I had to tell them: “Your mortgage might be ready but there is a very good chance your solicitors won’t”. It can be so hit and miss and the legal side of it takes up a lot of time.’
Meeting the deadline
If you are purchasing a property and the solicitors are already working on your purchase, you could well make the deadline. If you are viewing properties at this stage or have just had an offer accepted, it may be very tight.
If you are buying a property and have no chain, you may think the transaction will happen swiftly, but bear in mind others can slow it down. Even if you are efficient and respond to your solicitor’s queries or requests for paperwork quickly, the other side could be slow, which will delay things for everyone.
‘If you’ve got no chain but a slow solicitor on the other side, or a slow vendor, there is every chance you could miss the deadline,’ says James. ‘But if you can get everything up and running and moving quickly you might be OK.’
Be efficient and hope for the best. ‘Be responsive to solicitors,’ adds James. ‘The solicitor’s work is the stuff that will take the longest. If they are emailing you asking for a document or a piece of information, get back to them straight away and don’t give them the excuse that they had to wait for you.’
While it’s helpful to be efficient and optimistic, it’s also important to budget cautiously. ‘Don’t budget for completing to meet the stamp duty holiday,’ adds James. ‘Have the stamp duty money set aside just in case.’