Homebuyers hoping to benefit from the stamp duty holiday are facing a race against the clock.
With less than seven weeks left until the stamp duty threshold is lowered at the end of June, some councils are taking months to return local searches, with potentially thousands of pounds at stake for prospective homeowners.
Under the current rules, no stamp duty will be paid on the first £500,000 of a property purchase until 30 June – saving buyers up to £15,000 compared to normal tax rates.
The conveyancing process takes around 12-16 weeks, according to the Homeowners Alliance
After that, there will also be no stamp duty charged on the first £250,000 of a property purchase until the end of September – saving buyers a maximum of £5,000.
The nil rate band for stamp duty will then revert to its pre-holiday level of £125,000.
Whether or not a buyer completes on time will largely be in the hands of their conveyancing solicitor, as the legal process is usually the most time-consuming aspects of buying a home.
In turn, conveyancing timelines are often heavily influenced by the time it takes for local authority searches to be returned.
These vary dramatically across the UK, according to research by the online mortgage broker, Mojo.
What’s included in a local authority search?
There are two parts to a local authority search according to the HomeOwners Alliance: The Local Land Charge Register search and the CON29
The Local Land Charge Register search checks whether the property is a listed building, located in a conservation area, subject to a tree protection order, in need of an improvement or renovation grant, or situated in a smoke control zone.
The CON29 supplies information relating to public highways; new roads proposals; rail schemes; planning decisions that might impact the property; outstanding statutory notices; breaches of planning or building regulations or the existence of a compulsory purchase order.
There are also a host of optional extra searches, which you might need to get depending on your property’s circumstances.
These include environmental searches, water authority searches and chancel repair reports – in case you find yourself buying a property that is liable for church repair contributions.
A local authority search looks into whether the property is listed or located in a conservation area, as well as presenting information relating to new road proposals, rail schemes and planning decisions that might impact the property.
Ashfield District Council in Nottinghamshire has the quickest turnaround time, providing searches in five working days on average, whilst buyers in Hackney will typically be waiting 180 working days to get these returned.
A number of other local councils including Uttlesford District Council in Essex, East Devon District Council and Crawley Borough Council also report speedy searches taking six days.
|Local Authority||Working days to return a search||How many weeks?|
|London Borough of Havering||90||16|
|Durham County Council||65||13|
|Newcastle City Council||50||10|
|Lichfield District Council||40||8|
|Plymouth City Council||40||8|
|Salisbury City Council||35||7|
|South Staffordshire District Council||35||7|
Buyers in these areas still stand a chance of saving on stamp duty.
For example, based on the average £412,000 semi-detached house in Saffron Walden – which comes under Uttlesford District Council – a homebuyer could save £8,100 in stamp duty if they complete before 30 June.
At the other end of the spectrum, those in Hackney could face local authority search delays of more than six months, meaning buyers are almost certain to miss out.
The average price paid for a property in Hackney over the past 12 months, according to Zoopla is £700,656.
For a Hackney buyer paying the equivalent sum, completing before the 30 June deadline will mean paying £10,032 in stamp duty, whilst those failing to make it in time will see their tax bill rise to £22,532. From October it will rise to £25,032.
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Havering in East London and Dorset Council are also reporting some of the slowest responses in the country – 90 and 70 working days respectively for local searches to be returned.
‘With less than seven weeks to go until the deadline there will be many wondering if they are going to complete on time, with conveyancers doing all they can to keep clients happy,’ said Richard Hayes, chief executive at Mojo Mortgages.
‘Although these times are average and theoretical, they do help people realise how long things can take, and how tight it could be.
‘If they do think they are at risk, it’s really important they speak to their conveyancer about no-search indemnity insurance.’
This covers buyers financially if they decide to proceed without local authority searches being returns.
What to do if your searches are being delayed
Delayed searches are one aspect of a house purchase that a buyer and their conveyancer have little control over.
Instructing the conveyancer to begin local searches as soon as the offer is accepted is one obvious way a buyer can speed up the process.
An alternative option is to contact the local council to try and chase things up – although there is no guarantee this will speed up the process, which many local councils working through a considerable backlog thanks to the extremely busy housing market.
Searches uncover information relating to public highways, proposals for new roads, rail schemes or planning decisions that could affect the property
If you are willing to pay an extra fee, you could also contact a personal search company, who will conduct their own investigations to speed the process up.
‘The best way to speed up a search, is to contact a personal search organisation who will be able to run a search alongside the council and often produce searches quicker than local authorities can,’ explains Mark Hayward, chief policy adviser at Propertymark.
‘You can do this quickly and easily via the Council Of Property Search Organisations website, which lists a range of companies that can help.’
The nuclear option for buyers who are unable to get their searches completed in time is to go ahead with the sale anyway and take out search indemnity insurance to cover any costs that might come up as a direct result.
The caveat here is that this be subject to your mortgage lender’s approval – and many banks and building societies won’t accept it.
If you can get approval, the insurance can cost as little as £20, according to the HomeOwners Alliance.
It will typically cover some, but not all, of the issues that would have otherwise been revealed had a search been carried out before completion.
It enables buyers to proceed with their house purchase in the absence of local search results with a little more reassurance – at least monetarily speaking.
However, even if you are covered financially, finding out that there is something seriously wrong with a home you have already bought can be a huge headache.
‘Search indemnity insurance protects the buyer from some of the financial risks which could be revealed on searches,’ says Rob McKellar, head of residential conveyancing at Slater and Gordon.
‘But it would not protect against the inconvenience and distress of dealing with the problem once you move in, whilst also not covering wider incidental costs.’
Tips for Buyers and Sellers
Advice by Rob McKellar, head of residential conveyancing at Slater and Gordon
Make sure you have all your paperwork ready and available. Every ten minutes you spend rifling through your stack of documents to find that one elusive bit of information or file adds up over time.
Get Finances in Order:
Being a cash buyer puts you in a strong position to move forward with a purchase. But it’s also important to make sure mortgages are ready and your bank has all the information needed to proceed with a purchase.
It’s not always possible to respond immediately – sometimes a reply will depend on getting information from somewhere else in the chain or system, such as a survey result. But if you’re able to respond, the sooner you do, the quicker the process is likely to be.
Keep in touch:
A good relationship with your or your seller’s estate agent is always a good idea. Clear and open dialogue usually pays dividends. A quick chat on the phone can solve an issue far faster than corresponding in writing.
Understand the chain:
Foreseeing problems and working to avoid them is the golden rule of smooth house sales. Chains are inherently problematic. If you’re aware of a potential pinch point somewhere along the chain where a delay might occur, you can work that into your plan and it won’t come as such a surprise. It will also mean you can flag it to your solicitor, agent or their agent.
Dates and times can slip so try not to be too rigid with your schedule. If there’s any way you can add flexibility – giving yourself a broader window to complete, being open to renting for a time if you’ve not found your dream home yet or your next purchase is delayed, are all things that can give you flexibility.
What other delays can a buyer expect?
On top of delayed searches, there are other issues that can delay the conveyancing process.
Many property transactions are dependant on a chain of buyers and sellers, all relying on each other to ensure they can complete on their own purchase.
If any transaction in the chain is delayed or collapses, everyone in the chain is impacted.
Often the buyer, seller, or their legal teams take too long responding to emails, returning documents and completing forms.
It is, therefore, vital to be proactive and ensure any delays are being chased up.
‘Regularly engaging with the conveyancer and being prompt and co-operative with their requests for documents can prevent last minute hold- ups,’ says McKellar.
‘It is also useful to ask your conveyancer to blind copy you into any enquiries raised with the seller’s solicitors, and to ask the estate agent to help chasing replies to those enquiries.’
Inconsistencies with the title deeds, issues with planning consents such as loft or garage conversions that have not been properly approved as well as problems relating to the buyer’s mortgage application or survey can all slow down the legal process.
‘Getting mortgage applications in at the earliest opportunity is helpful,’ says McKellar
‘It is also useful to have a full paper trail available of how you have accumulated your deposit, going all the way back to the original source.
‘Conveyancers are very strictly regulated around anti-money laundering safeguards, and therefore need to perform detailed checks on source and proof of funds.’
Another factor that many buyers are not aware of is that buying a leasehold property typically takes a lot longer than buying a freehold.
‘You have to get information packs from the freeholder or managing agent and they typically take six to eight weeks to come through,’ says Sarah Dwight, a member of the Law Society’s conveyancing and land law committee.
‘You have to pay for those packs upfront for about £400-£500, so it’s crucial that sellers do this in advance to avoid delay.’
Often the initial management pack alone is not the only interaction needed with the freeholder or management company.
‘Usually there will be enquiries raised on the information in the pack, and there can be some time spent going back and forth with the management company,’ warns McKellar.
‘Often they can be quite slow to respond, and many management companies still insist on receiving a cheque in the post in order to release information.’
Can I really meet the 30 June deadline?
Ultimately, with some conveyancers claiming it is taking 20 weeks on average for purchases to complete, the 30 June deadline may come too soon for those yet to have an offer accepted.
But for those determined to try their luck, or at least make the 30 September deadline, there are still some things you can do to improve your chances.
First, discuss likely timescales with a conveyancer or solicitor before instructing them.
‘As a professional buyer my advice is tough – if your conveyancer doesn’t think they can exchange and complete by the end of June then find another one,’ says Henry Pryor, a property expert and professional buying agent.
Second, if you need to sell your own property and are yet to find a buyer, plan ahead.
‘The best way to speed up the process is for the seller to prepare ahead by having a draft contract, property information form and ideally local searches already to hand before they go to market,’ says Pryor.
Third, have a solicitor or conveyancer organised so that you can begin the legal process as soon as your offer is accepted.
‘It’s important that they start the conveyancing process immediately as there is lots of pressure on the searches, and the conveyancing system as a whole at the moment,’ says David Darlington, partner at Fieldings Porter Solicitors.
‘Even those who start now do not have a guarantee that they will complete in time for the end of June, but there is still a chance.’
Finally, arrange your mortgage and survey at the earliest opportunity.
‘Get your mortgage offer in place as soon as you can, and ideally have an agreement in principle arranged before you find a property,’ says Dwight.
‘Mortgage offers, surveys and searches all come from different places and as the conveyancer we have to put it all together like a jigsaw puzzle.
‘Making sure you organise these as quickly as possible will give us the best chance of getting contracts exchanged and the purchase completed in time for the deadline.’
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