The end of the stamp duty land tax (SDLT) holiday at the end of March 2021 seems such a long way away at the moment.
Even with the mini housing boom that we’re experiencing at the moment, the time it takes to market a property and begin the conveyancing process is timely with many homeowners believing they’ll have plenty of time to sell and purchase their new home before the end of the SDLT holiday.
Beth Rudolf, the Director of Delivery at The Conveyancing Association has given us her thoughts on property transactions.
In a post-Covid-19 lockdown housing market, you’d be right in thinking that every single month going forward is important, particularly when there is no vaccine, the number of cases has been steadily increasing in recent weeks, and we have seen a growing number of local lockdowns taking place throughout the country.
However, in the grand scheme of things and in light of the Government incentives currently available to purchasers with the stamp duty holiday, September perhaps takes on even more importance, particularly for those who want to both sell and purchase a home before the end of March 2021.
Having a deadline of sorts can help focus the mind of clients, specifically when it comes to completing housing transactions, the time on average it takes to do this, and the operational issues which may well hamper the ability to secure a completion before the end of the first quarter next year.
The fundamentals of this situation are as follows and, everyone working within the transaction at whatever level, should really be spelling this out to clients. Essentially this is all about the time it takes to list, to find a buyer, to complete and move.
Pre-Covid-19 the time it took (from the marketing of the property) to finding a buyer was, on average, 79 days, and the total time from listing to moving into a property was 187. If that average holds then, by consulting your calendars you’ll know that the 25th September is 187 days before the 31st March next year when the stamp duty holiday is due to end.
Now, of course, there are some caveats to drop in here. Perhaps most notably, the different ways many businesses are working post-lockdown – agents may need to take videos of properties, viewings may be taking place virtually, lenders and mortgage advisers may be operating differently and therefore not as efficiently, the same might be said for some conveyancers with remote workers and staff potentially being on furlough.
In other words, there are a whole host of reasons why that average timescale may slip even further, which makes the 25th September date even more important.
Now, of course, many transactions will complete far more quickly than this, but for others the timetable will be tight to say the least, and therefore it is going to be in everyone’s interest to do everything they can to speed up the process, but – and this will certainly be important for all property practitioners – to prevent a waste of time on a transaction which cannot proceed.
To that end, here are six methods by which a transaction can be expedited. They will however need action and a motivated buyer/seller/agent/adviser/lender/conveyancer, etc but they should ensure that everyone is in the best shape possible to proceed within the quickest timetable.
What could home movers be doing to help themselves and make the conveyancer’s job easier?
- The seller should instruct their conveyancer on listing. On average it takes 28 days between sale agreed and a conveyancer on-boarding the client and getting the forms completed when using a manual process – this reduces to nine days where the conveyancer uses a fully automated digital platform.
- If the seller asks their conveyancer to order local searches, and drainage and water searches this can have a surprisingly positive impact on the transaction time (assuming that the searches are either official searches or regulated searches and therefore the buyer and their lender can rely up on them under the Search Code/Authority indemnity schemes). There are two reasons for this:
- Four out of the top 10 reasons for post-valuation queries arising on a mortgage offer are as a result of Local Authority information not being available to the valuer when they value the property. By ensuring the estate agent has the correct information about planning permission, buildings regulations, rights of way, unadopted roads, lease terms, ground rents and flying freeholds, etc most post-valuation queries can be totally eradicated. Also, post-valuation queries pre-Covid-19 added 21 days to the average process; it’s longer now with the delays on valuations and being able to contact lenders due to the high demand.
- Delays are being reported at the Local Authorities in obtaining searches especially where search agents are undertaking the search so the terminals have to be cleaned between each appointment, reducing the number of appointments available each day. Remember, searches won’t even be ordered until after the conveyancer has been instructed so that’s likely to not be for 28 days into the process.
- Instructing their conveyancer to order LPE1/FME1 where applicable – on average these take 54 days to come back after the payment to the administrator/managing agent has been made.
- Ask their conveyancer to review the property information forms and title and to identify any issues which might impact a sale. Things like onerous lease terms, short leases, estate rentcharges, etc can then be highlighted to either offer solutions or to ensure a suitable buyer is found, rather than accepting an offer from a buyer who could not proceed with the issue in place and therefore will pull out. If a buyer pulls out even after just a couple of weeks, the seller may be unlikely to find a new buyer in time to complete before the stamp duty holiday cut off.
- The buyer should obtain a mortgage decision-in-principle ahead of putting an offer forward – delays in obtaining mortgages are growing.
- The buyer should instruct a conveyancer prior to offer – the same on-boarding timescales apply on average plus they can ask the conveyancer to check the material facts disclosure required from the estate agent to help them identify whether there will be an issue buying or mortgaging the property.
Obviously, this might still not be enough however by ensuring those six points are covered, we are doing all we can to help make completion by the 31st March a possibility.
And if you think you simply do not have the resource to do this then think about the opportunities to outsource – either to a digital on-boarding software system such as Perfect Portal, ULS Technologies or Really Moving or to a title review provider such as Teale Legal or PCC. The savings alone in the 34% of transactions which would otherwise fall through are worth it, let alone the costs saved in a reduced timescale to get the transaction through.
Time is always running out in our marketplace, but when we have a deadline, at a time such as this, then it’s doubly important to make these actions a priority.