Chancellor of the Exchequer, Rishi Sunak, recently announced that changes to the Stamp Duty Land Tax (SDLT) were necessary to reignite the UK property market. This came after month-on-month property enquiries dipped from 100,000 per month in February 2020 to 40,000 a mere two months later, and is intended to kick-start the residential property industry as the UK navigates the unknown post-pandemic world.
After Sunak’s Stamp Duty alterations, any purchase of residential property up to £500,000 will be exempt from paying any tax. How have the taxes changed compare to the previous SDLT regime, and how is the “new normal” industry going to affect the conveyancing side of things?
Lowered rates until 2021
The Chancellor’s Stamp Duty holiday is applicable from 08 July 2020 to 31 March 2021, giving residential property buyers a golden opportunity to save money on the transaction. Rishi Sunak hopes that the uptick of the nil rate band for Stamp Duty purchases over £500,000 should attract property buyers back to the market.
Updated Stamp Duty rates:
*Image courtesy of Sable International
Previous Stamp Duty rates:
*Image courtesy of stampdutyrates.co.uk
How conveyancers get involved
This is good news for the property market, but a Stamp Duty holiday doesn’t always mean that buyers are going to flock to market with cheque books in hand. Future home owners are nervous, and aren’t sure how property purchases have been affected by COVID-19.
People buying homes in 2020 should partner with conveyancers, who know the law and who are confident in their ability to complete property transactions successfully – come what may. One big challenge has been conducting physical inspections of properties. However, contracts can still be exchanged and purchases can still be finalised at this time. Many conveyancers are finding clever ways to bridge this gap, conducting virtual guided tours and using platforms like Google Maps.
In situations where a property is not occupied, transactions can occur as normal and buyers can move in whenever they please (adhering to social distancing regulations). But if a property is occupied at the time of sale, parties involved should defer property exchange and completion to a later time.
Should contracts already have been exchanged, parties should agree on a deferment of completion. If contracts still need to be exchanged, the transaction should be delayed if at all possible and all risks should be carefully considered before moving forward.
What are the risks of exchanging contracts?
Parties should be willing to negotiate and facilitate the sale in a way that accommodates all involved. Unfortunately, not all buyers are able to delay their purchases – and not all sellers are willing or have the luxury of being able to wait. Should an agreement not be reached, and the original completion date can’t be met, the following risks are carried by the defaulter:
- They will be liable for late completion interest for the period between the agreed completion date and the actual date of completion;
- If the seller is ready to complete, a notice to complete can be served. If completion does not happen by the stipulated date, the contract can be terminated and the buyer could face losing their deposit.
Buying or selling a property at this time in history doesn’t have to be frightening. Partner with property professionals who change with the times, and who will look after your best interests as you buy or sell a property in the UK.
