The Stamp Duty holiday applies to all properties purchased between 8th July 2020 and 31st March 2021 (inclusive). Assuming it closes on schedule, there are basically three months left to complete transactions. This raises the question of whether the Stamp Duty holiday is still meaningful for new buyers (and sellers).
New buyers
If any buyer is considering entering the market now, then they really need to get their mortgage arrangements in hand as soon as possible. This could mean going down the mortgage preapproval route while they are house-hunting.
If they find a property before the mortgage preapproval is finalised, they might be able to put in an offer. Then they could get their lender to push through the approval or change to asking for a mortgage on that specific property rather than a generic preapproval.
What’s more, the safest route, insofar as there is one, is to look for properties which are both chain-free and fairly standard. The first point is obvious. Not only is a chain only as good as its weakest link, but longer chains also take longer to move and right now time really is of the essence.
The second point basically means to look for properties which are likely to provide straightforward work for conveyancers. Do some research on the area and see if anything throws up a red flag, for example, mining works or nearby water. Also, ask sellers directly if they have all their paperwork ready.
New sellers
You may want to think about whether or not you’re prepared to accept an offer from a buyer without mortgage preapproval. In principle, the risk of losing out on the Stamp Duty holiday is on the buyer, not the seller. In practice, however, you need to think about what may happen if the buyer cannot complete in time.
The two big risks are that the buyer pulls out completely and that they reduce their offer. In fact, the buyer could find themselves forced to do one or the other. They may not be able to get a mortgage at all. If they do, they may not get a mortgage to cover what they initially agreed to pay.
Similarly, you might want to think carefully about whether or not you want to take your chances with an onward chain. Even if you think it’s secure, you may find that buyers for your property will be wary about getting involved with it. They’re already getting close to “the point of no return” for getting conveyancing finished before the deadline.
On that note, it’s in everyone’s interest for sellers to get their paperwork in order as early as possible. Ideally, the buyer’s conveyancer should be handed everything on the proverbial plate. Sellers should also make sure that they are easily contactable in case the conveyancer does have any further questions.
Is it worth the rush?
Buyers need to be careful that they don’t end up rushing into making decisions they later regret. This is particularly true for first-time buyers who already get Stamp Duty benefits. In fact, unless first-time buyers are under pressure to move, now may be the time for them to sit on the sidelines and wait out the rest of the Stamp Duty holiday. They will then regain their tax advantage over onward movers.
Even if the Stamp Duty holiday is extended, its effect may not be as impressive the second (or subsequent time around). The whole point of time-limited offers is that they force people to take action within the given time frame. If people get the idea that the time frame can be extended, then they may feel under (a lot) less pressure to act.
Your property may be repossessed if you do not keep up repayments on your mortgage.
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