The Stamp Duty Holiday deadline is fast approaching, and as it does, sellers, buyers and property professionals are scrambling to get their transactions over the line before 31st March 2021. In order to avoid paying Stamp Duty at a higher rate, transactions must have completed by that date.
We’ve asked Portico’s Head of Sales Progression, Sean Darlow, to comment on the broader property transaction ecosystem, and the influence that various parties can have on the speed and quality of a transaction. Here are his expert insights and tips for a smooth and timely property transaction.
During the earliest stages of the conveyancing process, how important is it for a buyer’s Mortgage Broker to communicate proactively with an estate agent?
Very important. When a buyer has their offer accepted it can be an incredibly exciting time for them, but the process that follows can be equally as stressful. There are a number of moving parts and property professionals involved for buyers to consider when they enter into the transactional process. A large number of sellers are willing to put viewings of their property on hold once they have accepted an offer from someone, so it is not unreasonable for them to expect a buyer to submit their mortgage application right away.
However, problems with finance are one of the main reasons why sales across the UK fall through. No-one wants to waste weeks or months waiting for a mortgage that never materialises. It is so important that brokers communicate with the estate agent, who is often best positioned to advise buyers and sellers and help alleviate any concerns.
Related: How Will The Prime Minister's Plan To Offer 95% Mortgages Work?
What selection criteria should a buyer apply when considering a conveyancer?
A buyer’s conveyancer (e.g. a solicitor) has a very important role to play. Not only are they responsible for the eventual transfer of property ownership, they also make legal enquiries throughout the process on behalf of their client (and their mortgage lender, where one is required). Choosing a bad conveyancer can be the difference between completing the purchase in ten weeks or ten months – or in the worst case, not at all.
Price should not necessarily be the main factor when it comes to choosing a conveyancer. Of course, take care to read and understand all of the fees and disbursements that a conveyancer might charge (since December 2018, regulated law firms and practitioners are required to display their pricing in a prominent place on their website), but bear in mind that a superb conveyancer is worth their weight in gold.
Ask the estate agent who they would use if it were them who was buying the property. They know who the reputable conveyancers are, which ones are on top of their caseload, and perhaps, which ones are best avoided. I always suggest speaking with a conveyancer before you decide to instruct them, so you get a feel for how they work. Ask them;
- What can you expect from the process?
- How much annual leave do they plan to take in the coming months?
- Will they keep you and the estate agent up-to-date?
At the end of the day, the final decision of who to instruct falls on the client, so please choose wisely.
At what stage of the sale process should a vendor speak with a solicitor?
I am a firm advocate of homeowners being ‘sale ready’ when they first put their property on the market.
- Complete the TA forms (property information, fittings & contents, etc)
- Check the title deeds for new financial charges or other potential issues
- Dig out all of the property’s certificates and warranties
- Get a copy of the lease (if selling a leasehold property)
- Consider having the gas and electric installations serviced
This is information that any buyer will almost certainly ask for, so if a homeowner is truly intent on selling, why needlessly delay this part of the process? Be ready, and be transparent and upfront with all the material property information, so that all prospective buyers can make better buying decisions.
Make sure your conveyancer is ready to send everything across to the buyer’s conveyancer on day one of your property being under offer. This, I believe, leads to quicker transaction times and fewer fall-throughs. A homeowner who is 'sale ready' from the outset could save themselves time and money in the long run.
Before Portico finds a buyer, what could a vendor’s solicitor do to facilitate a faster exchange and completion?
The extent of work will depend on the seller’s individual circumstances and how quickly they expect to find a buyer who can proceed with the process. A seller can pay a relatively small fee to have their title deeds, TA forms, and associated documents (lease, etc) reviewed by a knowledgeable conveyancer who offers the service. This could highlight issues that can be resolved whilst the property is marketed for sale. The alternative would be finding out after a buyer has made an acceptable offer and the resulting delay possibly jeopardising the sale.
There is often required information relating to the property that can only be obtained from a third party, who charge a fee. Whilst the seller might find the initial cost for this palatable, they should be mindful that some reports have a short shelf life. Local authority searches, for example, can reveal restrictions relating to the land and property, and are required of the buyer before they take out a mortgage. A seller might consider submitting their own local authority search to assess the results and with the view of selling the search results to their eventual buyer; however, the search can cost hundreds of pounds and the lenders will usually require a local authority search to be no more than 6 months old at completion of the transaction.
How long are Local Authority searches currently taking to be returned across various London Boroughs and have they adapted well to the sheer weight of search requests?
The time spent waiting for searches varies greatly across London boroughs. There are several reasons for this, with the biggest being Land Charge Departments being under-resourced, and the variable impact from the coronavirus pandemic. Some local authorities are still managing to get official searches out in one or two weeks, whilst others are reportedly taking five weeks or more.
A recent cyber-attack on Hackney Council has resulted in them being unable to process searches for the foreseeable future, which comes as dreadful news for anyone trying to buy or sell in the borough before the stamp duty holiday deadline (31st March 2021).
If a solicitor is still awaiting searches from an offer accepted in late 2020, what can a buyer do to increase their chances of collecting the keys before the Stamp Duty Holiday cut off date?
Firstly, one must consider whether or not searches are necessary for the sale to complete. If the buyer requires a mortgage then they almost certainly will be. If instead they are a ‘cash buyer’ then they might be inclined to proceed without. Whichever is the case, if a buyer requires a local authority search then there are two options:
- Continually chase the search provider, or
- Ask your conveyancer if Local Authority Search Indemnity Insurance is an acceptable alternative.
What is Local Authority Search Indemnity Insurance and do I need it?
Local Authority Search Indemnity insurance is a type of insurance that provides coverage in the event that an order is served that results in you having to sell your property below the price paid for the property.
It is always advisable for a buyer to seek such legal advice from a knowledgeable conveyancer, and to understand what it means for them to have an indemnity in place of local authority search results.
Are trade bodies supportive of indemnifying against missing searches, and how has guidance changed in line with the Stamp Duty Holiday?
Since before the outbreak of coronavirus, there has been increasing pressure on the government to address the growing issue of delays in the provision of searches. With the Stamp Duty holiday set to expire at the end of March 2021, the issue is becoming increasingly time critical. To reassure homebuyers and conveyancers, and help them overcome the intense pressure to complete transactions quickly, the Council of Property Search Organisations (CoPSO) prescribes a 'Search Code' that outlines the circumstances when it is appropriate to use indemnity insurance.
One of the key principles is that the search agent must only provide insurance for the information they cannot provide in any required timeframe. The agent must continue to provide the conveyancer with the missing information as and when it becomes available. This will come as some relief to buyers who feel they may be forced to buy ‘blind’.
With the SDLT holiday due to come to an end in less than 11 weeks, I expect more and more buyers will look to relatively cheap indemnity policies as an alternative to paying tens of thousands of pounds in tax.
Who normally pays for indemnification?
It is standard practice for buyers to obtain their own searches at their own cost. Of course, when it comes to buying and selling residential property, until an exchange of contracts takes place most things are negotiable. If it is felt that another party – perhaps the seller – would also benefit greatly from an early completion, maybe they could be persuaded to contribute something towards the cost of an indemnity. This would be something to discuss with the seller's estate agent, or proposed through the conveyancers.
Tips for successfully completing before the end of March
With any extension of the Stamp Duty Holiday now unlikely, buyers and sellers alike need to get more proactive than ever to meet the looming deadline.
As outlined earlier, sellers need to provide their conveyancer with as much information as they possibly can, and quickly. When initial enquiries are raised by the buyer's solicitor, they need to be responded to as soon as possible – undoubtedly, their replies will give rise to further enquiries that also need to be responded to promptly.
Our advice to buyers is to submit any mortgage application as soon as your offer for the property is accepted; at the same time, find a good conveyancer and instruct them to submit searches. If time is short and you fear searches may not return in time, discuss with your conveyancer if an indemnity policy is suitable for you.
Lastly, try not to stress and ensure you keep talking to your estate agent! They want the sale to complete just as much as you do, and are in the best position to coordinate all of the property professionals and keep the sale moving forward.
If you need any more information about mortgages, get in touch with our Portico Finance team. Or, if you are looking to buy, sell or rent property, get in touch with our team on 020 7099 4000. Click the link for an !online property valuation.