Issue 2: December 2020
WARNING: Stamp Duty Holiday Deadline 31/03/2021
Deadline: Ensure that your client is aware of the deadline, and knows they will need to pay stamp duty if a transaction is not completed before the end date.
Known issues: In some areas, local authority searches are taking a long time and the average time taken to buy a property has increased significantly, so it may not be possible to complete before the exemption ends.
Budgeting: Clients should budget conservatively, on the basis that stamp duty will be payable. Completion and other notes of required funds should consider this.
Capacity: Expect a client surge in demand, in order to beat the deadline. Ensure that you have capacity to deal with the transactions you take on, with appropriate supervision in place. Take into account that disruption and delay can arise for many reasons, which can't necessarily be predicted. These uncertainties (including potential staff shortages without much notice, due to pandemic issues), can reduce your effective capacity directly and indirectly—for example, do you have a backup plan if one or two members of the accounts department are away?
Delay: Manage transactions promptly. Clients could pursue a claim against you if there are avoidable delays and they miss the end date or if a chain collapses due to stamp duty becoming payable.
Valuation: Some are predicting that the end of the stamp duty relief will lead to a reduction in the value of some properties, which become subject to stamp duty or different levels of duty. Although you do not advise on the transaction's financial viability, clients may need to be informed that the property's value could possibly decline after completion because of this—at least in the short term—and because overall demand or availability of mortgages may vary after stamp duty is reimposed.
Records: Remember to make records of the advice you provide to your clients about this and any other issues.
Charging: Clients will need to be told beforehand that fees are payable whether the transaction completes or not. The mortgage advance can only be released if the firm has cleared funds to pay the eventual stamp duty and HM Land Registry fees at completion, or accepts responsibility to pay them. The UK Finance Mortgage Lenders' Handbook for Conveyancers (clause 10.4) states: "You are only authorised to release the loan when you hold sufficient funds to complete the purchase of the property and pay all stamp duty land tax and registration fees to perfect the security as a first legal mortgage or, if you do not have them, you accept responsibility to pay them yourself."