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On behalf of the property sector and our customers who are in the process of selling and purchasing a property, I seek to impress upon you the importance of extending the Stamp Duty Land Tax holiday deadline to avoid the breakdown in property chains and provide more time for our customers to complete their property transactions.
Delays are beyond our customers’ control
Pent-up demand from Brexit and Lockdown has created a surge of activity in the housing market since reopening in May 2020. The Stamp Duty Land Tax holiday announced by Chancellor Rishi Sunak, as well as the termination of the existing Help to Buy Scheme added further fuel to the fire, with people who perhaps weren’t in a rush to move, bringing forward their plans to find a new home. As a result of the pent-up demand and sense of urgency created in the market with people pushing to get their transactions completed by the deadline, despite the property market being in lockdown for two months, the overall volumes of transactions are expected to be greater than those seen last year.
Currently, conveyancers are dealing with record volumes of transactions, which has delayed the process. Mortgage applications, surveys and local searches are also all taking significantly longer as a result of the high volumes of transactions. There have been reports that pipeline conversions (exchange of contracts) in recent months are as low as 9%, they should be triple that. This is resulting in more and more sales that are stagnating and not progressing, with the average property transaction time lengthening from 12 weeks to 20 weeks.
The industry does not have the capacity to deal with the volumes of transactions that need to be processed within the timeframe of the deadline. According to Zoopla, there are around 140,000 more people waiting to complete sales compared with this time last year, however, only a quarter of transactions (based on sales agreed in January 2021) will complete by 31 March 2021. Data from TwentyCI reveals that approximately 325,000 buyers with a Sale Agreed from September 2020 to January 2021 will miss out on the Stamp Duty Land Tax holiday.
Our customers should not be penalised as a result of the delays currently being experienced within the sector that are beyond their control. A delay that could result in our customers having to pay up to an additional £15,000, most likely out the funds attributed to their deposit, on the purchase of their property
Breakdown in property chains
Another concern is that buyers will continue to offer on properties expecting to benefit from the Stamp Duty Land Tax rate reduction but in reality, they may already be too late. Failure to complete transactions before 31 March 2021 could see the breakdown of chains with buyers potentially financially unable to continue with the purchase, as they would not have budgeted for the additional expense of paying Stamp Duty Land Tax. An extension would ensure that many more transactions would be able to complete without the risk of falling through.
Additionally, significant stress will be removed from all parties involved, especially for the surveyors, conveyancers and lenders who bear the brunt of their customers’ demands. It will also save money that would be lost if the transaction falls through. Money that would have been spent on things during the property buying process such as surveys, searches and the like will also be lost if the property falls through.
Extension of the Stamp Duty Land Tax holiday
We urge the Government to consider extending the Stamp Duty Land Tax holiday by a further six months to reduce the risk to the consumer. We also propose that the Government work with the industry to develop a method to help smooth the end of an extended Stamp Duty Land Tax holiday to prevent a cliff edge in the property market.
Swift action by the Government will ease the pressure on both our customers and the industry, allowing more transactions to complete, avoiding possible break downs in property chains and a distressing period for movers. Any extension or gradual phasing of the Stamp Duty Land Tax would also assist in lessening a possible sharp decline in consumer demand, which would have a knock-on effect on the greater economy. The housing market is intrinsically tied to the economy’s health with home movers spending £12 billion a year on home-related purchases excluding property purchase and transaction costs. Moving home has many advantages to other aspects of the economy, so action taken by the Government to energise the property market will have a positive impact on the financial health of the country as a whole.
Lyttons Estate Agents Ltd
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At Lyttons, we were thrilled to be nominated and subsequently awarded two accolades from BUILD Magazine’s Property & Real Estate Awards 2020 for “Estate Agency of the Year 2020 – Essex” and “BUILD Customer Service Excellence Award – Essex 2020”.
We were very humbled by the judge’s decision and thank our generous clients for the praiseworthy feedback about the service they had received from our estate agency from both buyers and sellers that helped us secure these awards.
It’s wonderful when we strive to deliver the best buying and selling experience and to have our efforts recognised independently.
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If you were thinking of buying or selling a property to take advantage of the stamp duty break, expiring on the 31st March 2021, you had better get a move on.
It has been widely reported that agents, lenders, brokers, solicitors, removal companies and many associated professions are under strain due to the surge in demand resulting from Rishi Sunak’s stamp duty break.
This has subsequently increased property transaction lengths from the usual 10-14 weeks between a sale having been agreed to exchange of contracts, to the predicted increased length of 19-20 weeks - nearly 5 months!
If you secure a buyer in the next 7 weeks i.e. by mid-November 2020, this will allow you the better part of 19 weeks (and a couple of days) to complete before the stamp duty break window closes.
Top 5 Tips to sell before the stamp duty break ends;
- Show you are serious from the start – begin marketing your home with a realistic asking price. Now is not the time to try a speculative higher price.
- Paperwork – have all the relevant documents ready to hand to your solicitor the second a sale has been agreed. Time spent finding documents can cause undue delays.
A copy of the lease (if the property is leasehold)
Documentation related to the freehold (if it’s a freehold property)
FENSA certificates for replacement windows less
Your Energy Performance Certificate (EPC)
Relevant building restrictions
Building regulation certificate where alterations have taken place
A Gas Safety certificate for a new boiler or servicing of a boiler
NICEIC certificate for electrical installations
- Professional photos and floor plans – we always employ a specialist photographer to take outstanding photos. Prepare your house accordingly and try your best to keep it looking it’s best throughout marketing.
- Consider Covid – under the new guidelines agents and viewers will be wearing masks, social distancing and we advise sellers to leave the property whilst we carry out viewings. Keep a bag of cleaning products to hand so that after each viewing you can wipe down those high traffic areas like door handles and cupboard doors. Open windows to allow fresh air to flow.
- Will you chain break? If you have a buyer who is ready to exchange on your property, we would advise you don’t keep them waiting. Consider moving in with family or renting to aid in chain breaking where possible. This can be the difference between selling and an entire chain falling foul of extended timescales caused by increased demand.
If you are selling or thinking of selling your home, please call us today on 01992 666 191.
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Anyone who has bought or sold a property in recent years will know that conveyancing and awaiting search results feel like they take an age to progress to a point where a solicitor is happy to say they are ready to exchange contracts.
The aim: to make house moving faster, simpler and less stressful. Specifically, it wants to assess ways of avoiding, or possibly banning, gazumping.
Documentation released by the government says, “We are aware that the conveyancing process is a source of frustration for many buyers and sellers. Around 40 per cent of buyers and sellers [in a survey of 2,000 buyers and sellers commissioned by the government] felt that the exchange of contracts was delayed and where a delay occurred, they were likely to blame the conveyancer for the other party. When asked about how the home buying and selling service could be improved, around a third of buyers and sellers wanted a faster service from conveyancers. This is recognised by conveyancing sector and they are already planning to put in place a number of improvements.”
The government raised the scope for more technical innovation in speeding up the delivery of local government searches, and scope for more competition between conveyancers in general.
“We are aware that there are some firms which offer an online conveyancing service and that there are a number of initiatives already being pursued in both the private and public sectors which could help to facilitate e-conveyancing. To provide a firm foundation for a digital revolution in conveyancing, the government will continue to work with HM Land Registry to explore how data on property, such as leases, restrictions, covenants and easements, can be made available more easily. The government believes that this will improve the transparency of the purchase process and allow the private sector to create innovative ways to use this information”
You can read the full guidance by clicking here
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House prices have continued to rise however Land Registry data shows that the number of property sales have plummeted since the EU referendum
This has resulted in pockets of the UK property to experience mini house price booms due to a fall in available stock levels amidst general uncertainty following the Brexit vote.
Prices in London were up by the least annually at 2.6% and down 1% on a monthly basis to £484,362.
House prices are rising yet Land Registry offers an official snapshot of transactions in the 12 months since the Brexit vote and reveals a different story.
In June 2017 [lastest figures available] the number of property transactions completed in the UK decreased by 6.7% year-on-year to 85,528 sales, the Land Registry said.
Much of this decline was due to an 11% drop in England to 66,082 sales, with the rest of the UK experiencing increases.
Further analysis of the Land Registry data shows sales volumes have fallen across all English regions during those 12 months, with London victim to the steepest decline in the 12 months to June 2017, falling 20% to 6,768.