stamp duty holiday extension

Budget 2021: Stamp duty holiday extension

On 3 March 2021, the Chancellor made his budget speech. Within this, he announced an extension to the Stamp Duty Holiday that was due to end on 31 March 2021. The extension tapers the stamp duty holiday as follows:

  • No standard Stamp Duty Land Tax (SDLT) will be payable on the first £500,000 of the purchase price. This applies to purchases of residential property purchased in England that complete on or before 30 June 2021.
  • For purchases that complete between 1 July 2021 and 30 September 2021 inclusive, no standard SDLT will be payable on the first £250,000 of the purchase price of any residential property purchased in England.
  • Standard SDLT rates will apply to any part of the purchase price that exceeds these amounts.

Purchases that complete after 30 September 2021 will attract standard SDLT at the normal rates.

What does this mean for house purchasers?

This is no doubt a huge relief for many home buyers with ongoing transactions; especially those at early stages or with stalled transactions where the chances of completing before the original deadline of 31 March 2021 were slim.

SDLT surcharges for second homes and investment properties and non UK resident purchasers remain unaffected and applicable.

Find out here how the extended holiday will affect you.

First time buyers

Even after the Stamp Duty holiday has ended, Stamp Duty relief may still be available for first time buyers. For transactions completing after 30 September 2021, qualifying first time buyers will not pay standard SDLT on properties with a purchase price of £300,000 or less. If the purchase price is more than £300,000, SDLT still applies on the portion of the purchase price for the property exceeding £300,000. First time buyers buying properties with a purchase price of over £500,000 will not be entitled to any relief.

How will the stamp duty holiday extension affect my purchase?

If you already have a purchase ongoing, your solicitor or conveyancer will be able to advise you on how this might affect you specifically.

Generally, however, if you were already aiming to complete your property purchase at the end of March, you should be able to proceed as planned. If you and the chain are ready for agreed dates, there should be no need to make any changes. However, if you do want to make any changes, you should advise your solicitor or conveyancer as early as possible.

If you are considering buying a property this year, this extension gives you the opportunity to pay a reduced amount of (or potentially no) SDLT. We do recommend, however, that you have sufficient funds to meet any potential SDLT liability you may have in the event the deadline(s) cannot be met.

Get an instant conveyancing quote online or speak to one of our team on 0800 988 7756. We have offices in Leeds, Wakefield, Harrogate and London. However, we also offer a distance conveyancing service, which means that we can bring our experience and knowledge to your house move, no matter where you are.

new build first-time buyers

New build conveyancing for first-time buyers

A step-by-step guide

Purchasing a new build property can be a whirlwind of emotions, least of all if you are first-time buyers. From mortgages and buyer initiatives to conveyancing and stamp duty, there’s a lot to consider. But don’t panic, we’ve put together a list of a key steps below:

1. Your mortgage

Obtaining the right mortgage is vital. You may need to do quite a bit of research to determine the best lender for you. You may find it useful to seek guidance from a specialist new homes mortgage adviser as they will assist you when finding a suitable mortgage.

Consider obtaining an Agreement in Principle at the earliest opportunity as this will allow you to budget effectively and purchase a property you can afford.

2.Buyer initiatives

There are a several schemes available which are designed to assist you to get on the property ladder. These include:

Shared ownership

This allows you to purchase a share of your dream home from a Housing Association and pay rent on the rest. You must, however, meet the eligibility criteria, so research is essential before considering this option.

Help to Buy equity loan

Help to Buy equity loans are set up to assist first-time buyers to buy their first new build home. An equity loan allows you to pay a deposit of 5% of the purchase price, with the Government providing a loan of up to 20% of the purchase price to assist with the purchase of the property. The Help to Buy equity loan is interest free for the first five years; and thereafter interest will be charged on a monthly basis. From year six, it is an “interest only” loan. This means that your monthly payments only cover the interest and do not reduce the capital loan.

You can only use a Help to Buy Equity Loan to purchase a new build home.

Until recently, to benefit from an equity loan, the builder would need to finish your new home by the end of December 2020. As a result of delays to building because of the Covid-19 pandemic, the Government has extended this to include homes built up until 28 February 2021. You will need to complete the purchase by 31 March 2021.

Lifetime ISA

This type of ISA is available to anyone aged between 18 and 40 purchasing their first home in the UK. These are offered at most banks and allow first-time buyers to save money to contribute to the purchase of your home whether new build or an older property. You can contribute any amount to your ISA at any time or pay one lump sum of up to £4,000. Then, at the end of each year, the Government will contribute up to a £1,000 bonus to use towards your purchase.

3. Instructing a solicitor

The next important step is to instruct the right solicitor. Your solicitor will conduct all the legal work on your behalf and act as an agent between you and the seller.

Our experienced conveyancing team are happy to offer you a quotation whether you are purchasing a new build or second-hand property. We have a wealth of experience in dealing with all property transactions and will ensure that you are allocated to the solicitor with expertise to handle your purchase.

4. Exchange of contracts

This is the most significant step in the conveyancing process; and it is the point where your sale or purchase becomes legally binding. Once you have exchanged contracts you have made a legal commitment to purchase the property.

If you are purchasing a new build property, there is usually an exchange deadline to work towards. The deadline will be noted on the Reservation Form that you complete at the point of reserving your property.

Exchange of contracts will not take place until you and the contract are completely prepared, and any enquiries are resolved. We will advise you whether it is a condition of your mortgage to have appropriate buildings insurance in place either at the point of exchange of contracts or before legal completion takes place.

5. Stamp duty

There is currently a stamp duty holiday, which is due to end on 31 March 2021. This means that home buyers do not have to pay any stamp duty on properties costing up to £500,000. The rate of stamp duty for properties over £500,000 has been significantly reduced.

We understand that from 1 April 2021, stamp duty will go back to its pre-Covid rates. This means that first time buyers get a reduction on the stamp duty payable on properties up to £500,000. Properties costing less than £300,000 attract no stamp duty for first time buyers, with 5% payable on the price between £300,000 and £500,000. If the property costs more than £500,000, first-time buyers will pay the same rate of stamp duty as previous homeowners. Stamp duty has to be paid within 14 days of legal completion of a property.

You can calculate how much stamp duty you could be paying here.

6. Legal completion

Congratulations, you are now officially a homeowner! Legal completion can take place at the same time as exchange of contracts but can also be some time after, particularly if you are purchasing a new build.

Patience is key when purchasing any home, as overall it can be a lengthy process. However the most important thing to remember is to trust the whole process as your solicitor only has your best interests in mind. Get an instant conveyancing quote online, or call us on 0800 988 7756.

moving home

Moving home during the Coronavirus pandemic

Moving home under normal circumstances can be one of the most stressful and hectic times. However, the current Coronavirus pandemic makes moving home much harder. We, understandably, receive several questions about moving home during the pandemic each day. To provide some much-needed clarification, I will provide the answers to some of the most frequently asked questions.

I have exchanged contracts, what will happen if we go into lockdown?

Exchange of contracts is a legally binding transaction. Once exchange has taken place, the buyer and seller are both committed to the transaction and completion is to take place on the date agreed in the contract. Solicitors may include provisions in the contacts to manage any risks of a lockdown. This is known as a ‘Covid Clause’.

The current Standard Conditions of Sale state that in the event a party to the contract defaults on completion then the willing party are able to serve a Notice to Complete. This allows the defaulting party 10 days to complete with penalty interest paid (or deducted). The defaulting party must complete within this time frame. Failure to complete could mean the buyer will lose their deposit; the defaulting party could pay damages; and the other party could contract could be withdrawn, unless the non-defaulting party takes a ‘good faith’ view.

Do I still have to pay stamp duty?

The Government the government introduced a stamp duty “holiday” to boost the property market. The current threshold for stamp duty is £500,000, which means that if you purchase a property for less than this amount then there will be no stamp duty to pay. This applies until 1 April 2021, thereafter the threshold will be £125,000 for residential properties.

You can find out how much stamp duty you will have to pay using the online calculator.

What if my mortgage offer has expired?

On 26 March 2020, mortgage lenders began offering an extension to existing mortgage offers of up to three months. The extended offer will keep the original terms of the existing offer and simply change the expiry date of the current offer.

There are however still some risks that the offer may be withdrawn if your financial circumstances change, for example a job loss, change to income or drastic materialistic changes to the property. If this happens, the lender reserves the right with draw their offer.

How are ID and verification checks carried out?

During lockdown there was some relaxation to the way in which ID checks were carried out and certified in our office. We carried out ID checks over live video link, to ensure the safety of clients and staff. However, as restrictions have eased, we carry out ID checks within the office. Please remember that you must always wear a face covering unless exemptions apply.

Of course, restrictions and Government advice are changing all the time. Should circumstances change, we will advise you on any new procedures for ID checks.

Will the transaction take any longer?

Although buying and selling properties can now continue in some kind of normal way, there is still a lot of uncertainty with regards to the length of time taken to complete the transaction. The length of time may be longer than usual and there may be some delays. We will work to ensure the transaction runs as smooth as possible, however we may experience delays from third parties. For example, it may take longer than usual to obtain search results, responses from lenders and delays from other third parties.

We understand that moving home at the moment may seem extremely stressful. However, do not let this put you off. Your conveyancer will help you every step along the way. Rest assured we are all working as best we can, after all we’re all in this together.

If you would like to speak to one of our conveyancers, please call us on 0800 988 7756. Alternatively, you can obtain an instant conveyancing quote online.