When the extension to the Stamp Duty Land Tax (SDLT) holiday was announced in March, the property market breathed a sigh of relief.
There are now fewer than three months to go before the revised Stamp Duty deadline ends on the 31st June 2021. However, delays in the conveyancing process mean properties are often taking over 4 months from offer to exchange. Depending on where you are in the process, completing before the extended deadline could still be tight.
Fortunately, there are steps that buyers and sellers can take to maximise their chances of completing before the deadline.
Why are delays happening?
Conveyancing solicitors must collate and review a wealth of information from various sources. These sources include local authorities, lenders, HM Land Registry, managing agents and the buyer or seller.
Many property organisations still have employees on furlough and will be constrained by ongoing social distancing measures. Their bandwidth has been reduced by the surge in demand from home movers, eager to make up for time lost during last year’s lockdowns.
Delays in obtaining local authority searches have been widely reported in the news. HM Land Registry is also operating at reduced capacity.
What can sellers do to prevent delays?
There are several things you can do to progress your sale, even if you haven’t yet found a buyer. Taking a proactive approach could shave weeks off the conveyancing process:
Instruct a conveyancing solicitor ASAP
Even many experienced home sellers don’t instruct a conveyancing solicitor until they have accepted an offer. This is a mistake.
Much of the legal work on the seller’s side can be completed without a buyer. Your solicitor can carry out the necessary ID and money laundering checks and guide you through the completion of the various property forms.
Having had time to properly review your sale, the solicitor can anticipate the legal enquiries that the buyer’s solicitor will raise. Together, you and your solicitor can decide in advance how to address any potential issues and agree on a course of action.
Once you receive an offer, your solicitor will be able to send out the draft sale contract pack to the buyer’s solicitor within a couple of days.
If you wait until you accept an offer to instruct a solicitor, you will have lost your best opportunity to accelerate your sale.
Most solicitors offer a no move, no fee service, so there’s no financial risk in starting the legal process as early as possible.
Complete the property forms
Once your solicitor is formally instructed, you will need to complete the standard property information forms. These include the Sellers’ Property Information Form, the Fittings and Contents form, and the Leasehold Information Form (if you are selling a flat).
These forms are lengthy, and you may have questions for your conveyancer about how to complete them or what other paperwork you need to supply. Completing these forms before you find a buyer can save valuable time in the conveyancing process.
Source missing documents and certificates
The property forms will ask you if you have paperwork such as gas certificates, electrical completion certificates, warranties and other documents. If you can’t find these, your solicitor can advise you on how to proceed.
If the property forms identify a potential issue, like an unofficial roof terrace or missing building controls sign-off, your solicitor can recommend the best strategy.
For example, most legal defects can be covered off with an indemnity policy. Indemnity insurance is usually easier, cheaper and quicker than fixing the underlying legal issue.
This approach will enable your solicitor to present a solution alongside the potential problem, avoiding postal ‘ping pong’ with the buyer’s solicitor and therefore saving considerable time.
Reducing uncertainty and presenting solutions rather than problems will also help prevent the buyer from getting jittery.
Managing agent information
If you are selling a flat, sourcing paperwork from the landlord or managing agent can create weeks of delays at the best of times. COVID-backlogged requests for this information are currently overwhelming managing agents, creating even longer delays.
Commenting on leasehold transactions, Chris Salmon, Director of Quittance Legal Services said, “Obtaining management information has always been a potential cause of delays.”
“Managing agents range from small concerns to large companies with many employees. Either way, they will need to balance a return to normal operation with current government guidelines. Alongside the excess demand for management information, this has inevitably led to further delay for many leasehold transactions.”
“If your solicitor can source the management information while you await an offer, you can supply this to your buyer at the start of the conveyancing process and avoid one of the biggest causes of delay.”
Don’t be deterred by the speculative outlay for this information. Managing agent information often costs a few hundred pounds, but if you intend to sell you will have to pay for it in any event. Compared with the cost of a delayed transaction, or worse still the buyer pulling out, the outlay would be well worth it.
What can buyers do to prevent delays?
Although the bigger opportunity to complete any pre-offer preparation lies on the seller’s side, there are also steps you can take as a buyer to help avoid delays once you find a property:
Sort out your finances
Mortgage approvals are currently backlogged as lenders struggle to cope with new applications.
If you are buying with a mortgage, contact your lender and request an ‘Agreement in Principle (AIP). An AIP will help accelerate the application process once you find a property to buy.
Instruct a solicitor
Instructing a conveyancing solicitor before you have an offer accepted is a sensible move. You can complete all of the solicitor’s new client forms and formalities ahead of an offer being accepted.
If you are taking out a mortgage, your solicitor will also need to act for the lender in order to ensure the property offers suitable security for the loan.
Not all solicitors can represent all lenders. Delays frequently occur if a buyer’s solicitor is not a member of the lenders’ approved solicitor panel. In such circumstances, the lender will need separate representation and the legal work will be outsourced to another solicitor firm.
It is critical that you check whether your preferred solicitor is a member of your lender’s approved solicitor panel before you instruct. If the solicitor cannot represent your lender, find an alternative conveyancing firm.
Apply for property searches
Local authorities are also contending with major backlogs. Mortgage lenders will insist on searches but they are taking weeks to obtain. If you are getting a mortgage, ask your solicitor to apply for searches immediately after your offer is accepted.
Book a survey
If you are planning to have a survey, book it as soon as you find a property. Speak to your lender and ask if their surveyor could do the home survey at the same time as the valuation survey. Check availability with local surveyors and go with whomever can do the survey first.
If your move is still in the early stages, it may still be wise to have a contingency plan in place if you think your sale will miss the deadline.
First, consider what could happen to your transaction if the deadline is missed. If you are selling a property near the £500k threshold, could your buyer be stuck with a £15,000 SDLT bill? If you are planning to buy too, how will your budget be affected?
There are a number of solutions to mitigate the risk of missing the deadline. If your buyer is buying without a mortgage, they may be willing to forgo some of the usual steps that are currently causing delays, such as local searches, and complete without this paperwork.
A survey carried out in Jan 2021 showed that 70% of current purchases are not motivated by the SDLT holiday. However, if an unplanned Stamp Duty bill is likely to be a deal-breaker for the buyer, the seller could agree to split the difference – particularly if the alternative is the sale collapsing.
Conveyancing solicitors are under increasing pressure in the weeks leading up to June 31st. The key point is to make a contingency plan now, before the heat is on, rather than hoping for the best and becoming increasingly stressed as the deadline approaches.
This article was brought to you by Chris Salmon, co-founder and Director of Quittance Legal Services.