Home buyers welcomed the stamp duty holiday extension in this week’s Budget – but over-stretched solicitors say many will still miss the new deadline and some are even turning clients away.
Chancellor Rishi Sunak confirmed that the stamp duty holiday will continue to apply to the first £500,000 of a home’s purchase price until 30 June.
It will then taper off, applying to the first £250,000 until the end of September, before returning to the former rate of £125,000 at the beginning of October.
Speedy sale: Home buyers are keen to complete by June to take advantage of up to £15,000 in stamp duty savings. Rishi Sunak announced the extension in the Budget this week.
Rightmove has said that 300,000 additional home purchases could benefit from this.
However, property solicitors have said buyers entering the process now may have little hope of taking advantage of the stamp duty saving, because of a ‘bottleneck’ in legals and mortgage applications.
Tom Lyes, director of engagement at the industry website Today’s Conveyancer, said: ‘It’s good news, as if you were worried about beating the April deadline you should now be able to do this barring any major disasters.
‘But unless you have a number of things in your favour, it’s probably unlikely you are going to be able to complete by the end of June if you instruct [solicitors] in the next month or so.’
Conveyancing solicitors told This is Money that some firms were turning away new clients as they struggled to cope with their existing caseload, while others were warning buyers at the outset that they may still miss the June or even September deadline.
Conveyancers and mortgage lenders have both reported being massively over-worked since summer 2020 when the property market re-opened.
According to the Conveyancing Association, the average transaction now takes 20 weeks – around four months.
Sunak confirmed the extension of the stamp duty holiday in the Budget this week
On this basis, buyers having an offer accepted today would narrowly miss the June deadline.
Elizabeth Webster, director at Yorkshire-based conveyancing firm LCF Residential said: ‘Most firms have managed [their workload] by curbing the amount of new instructions they can take on.
‘We’re not going to allow ourselves to be inundated now: we’ve got to look after the staff that are actually dealing with this.’
She said buyers were looking for guarantees that their transactions would be done in time to meet the deadline, but that these were promises conveyancers could not make.
She added: ‘We have had calls from people who have rung around three or four lawyers and have had the same answer: if they’re looking for a guarantee that their transaction will be done by a certain date, we cannot give them that.
‘People need to have a contingency in place to pay their stamp duty if it does become payable. If they don’t, the purchase is potentially not going to happen.’
Buyers that are already in the conveyancing process may have more luck, but it depends on factors such as how many buyers are in their chain, the popularity of the area they are buying in and the workload of their solicitor and mortgage broker.
Prior to the Budget there had been calls for Sunak to restrict the extended stamp duty holiday to buyers who had had an offer accepted by the original 31 March cut-off, but that was not the case.
Ben Carroll, managing director at Enact Conveyancing in Leeds, said: ‘There had been calls for the Government to use a more creative approach, so only those who are already in the buying process get the benefit of the stamp duty holiday.
‘The risk, of course, is that extending the holiday could overstimulate the market again, bringing more transactions into an already over-stretched industry.’
When the threshold is lowered to £250,000 in September, there will still be no restrictions on which buyers can benefit.
Some conveyancers say that buyers will still be keen to make even a small saving and this is unlikely to take the pressure off.
Webster said: ‘I do think people will still push to complete – it’s just human nature. If you can save a few thousand pounds by completing by a certain date, people will still invariably try and do that.’
There have also been reports of conveyancing solicitors refusing to pick up the phone to buyers, claiming they are being inundated with calls to the point that it is slowing down transactions.
Mike Leeman, managing partner at Bell, Lamb & Joynson solicitors said: ‘I’ve seen out of office replies from conveyancers working for national chains saying “Don’t call us, we’ll phone you. It’s slowing down the transaction, when we have an update we’ll update you.”
Mike Leeman says some conveyancers are asking clients not to pick up the phone because it is slowing down their work
‘Clients believe that if they phone up every day it will get them a better service, but because of the nature of the market it’s actually slowing it down.’
He said his firm received an additional 10,000 emails and had a 30 per cent increase in inbound calls in February.
They have also refused to guarantee buyers that they will complete by the new stamp duty holiday deadline.
‘Our average completion times were about 12 weeks pre-Covid, but they have snuck up to about 15 or 16 weeks,’ he said.
‘We are saying to people, it’s unlikely unless it’s a really straightforward transaction and all the stars align. We won’t guarantee it.’
The property market does need to go back to normal at some point – whether that means ending any speculation that the cut will be extended again, or by making it permanent.
Tom Bill, head of residential research at estate agent Knight Frank, said: ‘Ultimately, there needs to be some finality, whether in terms of the end-date or by making the holiday permanent.
‘The housing market has exceeded expectations over the last year but it needs to revert to normal seasonal patterns of activity.
‘Any continued speculation around the end of the holiday would prove more damaging for the housing market than the end itself.’
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