Editors Note: The following content has been provided by Chris Salmon, Co-Founder and Director of Quittance Legal Services, a London based conveyancing solicitor panel.
What can home movers do to complete before the stamp duty holiday ends?
The Stamp Duty Land Tax (SDLT) holiday was welcome news for buyers and sellers when it was announced in July 2020. The temporary abolition of SDLT on properties sold for under £500,000 ends on 31 March 2021. At the time of writing, March still seems a way off for home movers.
However, backlogs in the homebuying process mean that transactions are taking around 5 months to complete on average. Anyone ‘bumping elbows’ on a deal after September 2020 and hoping to take advantage of the rate cut is facing a tense few months. They may miss the deadline altogether.
So what can you do to give your home move the best chance of completing before the end of March?
The holiday was introduced as a COVID-19 measure to help stimulate demand in the housing market. Many agents were already reporting positive demand before the holiday was introduced. The combined effect has sent the market into orbit with the Office for National Statistics (ONS) reporting new record highs for UK house prices.
The increase in demand means there are now hundreds of thousands of transactions working their way through the system. Demand is so high that banks, surveyors, local authorities and solicitors are inundated and struggling to cope.
However, recently published research suggests that over 300,000 moves-in-progress may complete after the holiday ends.
Obtaining local authority searches can hold up a purchase even in ‘normal times’. Some councils are now processing up to ten times the normal volume of searches, leading to severe delays. Mortgage lenders are also struggling with the backlog.
These issues cause delays at every stage of the process. Lenders need survey results before they can make mortgage offers. Solicitors need mortgage offers and searches to progress the legal side and so on.
How can sellers speed up the process?
There is much you can do as a seller in readiness for an offer. The following insights could significantly reduce the time taken to complete your sale:
Start the legal process
The best time to instruct a solicitor is immediately after your property goes on the market. Even in normal times, much of the initial legal work can be completed in advance of you finding a buyer.
Solicitors must follow strict protocols when taking on a new client. These formalities can take weeks at the moment, especially with solicitors working remotely and many of their legal support staff on furlough.
With an early dialogue established with your solicitor before you have a buyer, together you can anticipate and plan for any problems or hurdles e.g. missing planning permission documents.
If you choose a solicitor that offers No Move, No Fee, you won’t be out of pocket if your sale falls through.
Don’t be seduced by a ‘too good to be true’ conveyancing quote. A few pounds saved on legal fees will be a false economy when compared with a protracted (or even aborted) sale caused by poor service.
Finding an efficient and communicative solicitor should be your primary focus. If you don’t already have one, read reviews, call a few firms up and ask how busy they are or ask your agent for a recommendation. Estate agents won’t give you a bum steer – they want the deal to complete as much as you do.
Complete and return the property forms
Your solicitor will ask you to complete and return a set of property forms including the TA6 Property information form, the TA10 Fittings and contents form, and the TA7 Leasehold information form (if you are selling a flat).
These forms are lengthy, take a while to complete and require you to locate other relevant documents such as electrical certificates and FENSA documents. Don’t leave these forms on the hall table, complete and return them to your solicitor without delay. If you have any questions, your solicitor will be happy to advise you.
Once in receipt of these forms, your solicitor will be able to send copies out with the draft contract to the buyer’s solicitor immediately after you accept an offer.
Choose the right buyer
How smoothly your sale proceeds will depend on your buyer’s circumstances. If you are lucky enough to receive multiple offers, you might consider a lower offer from a cash buyer that is chain-free. Cash buyers can forgo searches, won’t get caught up in lender backlogs, and they won’t bring the inherent uncertainties of a chain.
Obtain the leasehold information
If you are selling a flat, getting the management information from your landlord or or managing agent can lead to major delays. Getting hold of this information can take weeks or even months.
In the current climate, sourcing management information is taking substantially longer. You can apply for this information as soon as you instruct your solicitor. It can then be sent out with the draft contract, or as soon as possible afterwards, to the buyer’s solicitor. Without this information, very little can happen on the buyer’s side.
Communication is critical. There is no such thing as over-communication when buying or selling a home. Tell your solicitor and agent upfront that you want to communicate by phone and email (not post). Keep everyone in the loop by copying your agent, broker and solicitor in all email correspondence.
If you want an update, call your agent or solicitor. Don’t worry about being a nuisance. ‘Top of mind’ can mean ‘top of pile’ for conveyancers, especially if they are juggling hundreds of other conveyancing files.
Wherever possible, scan and return documents by email. Sometimes an original copy must be sent via post, so check beforehand if a scanned copy will suffice. If you must post a document or letter, make sure you send it to the correct branch office.
How can buyers speed up the process?
Even if you are still house hunting, there is still much you can do in advance.
Most buyers don’t instruct a solicitor until they have an offer accepted. Choosing a solicitor and getting the file setup formalities (like ID verification) out of the way, before you find a property, can get you off to a flying start.
Sort out your finances
Some lenders are taking up to 2 months (from mortgage application) to issue mortgage offers. If you haven’t decided on a lender when your offer is accepted you can expect even more delays.
Deciding on a lender means you can get pre-vetted as a borrower. The lender can then issue an agreement in principle (AIP) which will speed up your application. An AIP also enhances your profile as a ‘more serious’ buyer when it comes to getting an offer accepted.
Your solicitor will also need to act for your lender. Your solicitor must be on your lender’s approved panel. If they are not on the panel, your solicitor will need to appoint another solicitor to complete the lender related work which will mean further delays (and cost).
Before you instruct a solicitor, make sure they are on your lender’s panel. If they are not, either choose another lender or another solicitor – it is that important.
Local authority searches
Your solicitor will need to apply for property searches from the relevant council. Most councils are completely overwhelmed with the volume of search requests, only processing searches deemed to be ‘urgent’.
If you are a cash buyer, you do not strictly need searches. You should weigh up the risk of proceeding without searches with the speed benefits of avoiding the searches backlog.
Once you have an offer accepted let your solicitor know and ask them to apply for searches immediately.
Book your survey
Surveyors were already in short supply. With demand at peak, some surveyors are quoting 6 to 8 weeks lead time for a Homebuyers Report. It is ultimately your choice whether you commission a survey, although it is usually advisable.
If you are having a survey, contact a few surveyors to ascertain their availability. It would also be worth contacting your lender before they carry out the valuation survey. Most lenders can arrange for the surveyor to do a full survey whilst they are on-site, and this may be a faster option.