Meeting the Stamp Duty Deadline
Written on 11 November 2020
I think most of us expected a second lockdown given the increase in COVID-19 cases, but this is very different to the first lockdown. This time, the emphasis is on preventing social gatherings while business - in general - is encouraged to continue in order to protect the recovering economy and to protect jobs. Guidance regarding the property market is that estate agents and valuers can still do their jobs as can conveyancing solicitors. This is all encouraging news, but what we were all most anxious to find out was whether or not viewings can take place. After a few pensive days we had confirmation that socially distanced viewings are allowed subject to appropriate safety measures – as they have been for the last few months. So, the property market is able to continue under the conditions of this new “normal” that we have had to get used to.
But is this really a kind of “normal”? No, it most definitely is not. Lenders are struggling to get back to full capacity and speed and local authorities are behind with search requests.
Lenders have a lot to do when they process an application, so even the slightest delay in receiving or clarifying one bit of information can really slow the whole thing down. They look at the answers to all the questions they pose, perform a credit search and verify incomes and expenditures. They also assess payslips, accounts and bank statements. In the event that anything is missing or they need clarity on something, the application is usually put on hold awaiting responses. The application then goes into a queue to be worked on once the answers or documentation is received. Obviously, the more applications requiring additional information and the longer it takes to receive responses, the quicker the queue builds up and the greater the possibility of delays. With lenders receiving a higher number of applications than would normally be expected - and fewer mortgage staff on the ground - it’s currently not unusual to experience delays of over a week, which is not helpful if the applicants have a deadline looming.
Local authorities are also faced with a similar set of challenges. Many of their staff are working from home and are therefore potentially less productive than they could be in a group in an office, while demand for searches is significantly higher than normal. This is why they are struggling to get searches out in a timely manner.
All in all there are currently difficulties and potential delays with most stages of the buying process. But what can brokers and applicants do? The best thing is to start the process early with your broker or lender. Talk through all aspects of an agreement in principle and ask for a full list of documentation that will be required as a minimum and what might be required in addition as a result of your personal situation – e.g. if a deposit is coming from family then a gifted deposit letter will be a likely request, possibly with a bank statement to evidence the source. This will give you the best chance that the underwriter will check it all and pass it for valuation instruction first time when you submit the full application.
Engage a solicitor early on as well. They will ask for all sorts of documentation too, like proof of identity and address as well as evidence of deposit. They will also have forms they will want completed. Even though some questions will relate to the property you may not have chosen yet, it is a good idea to look through it so you can easily complete and return it when the time comes.
If you are selling as well then the solicitor may ask for things like the title deeds or lease - if it is a flat - or guarantees for work that may have been done years before. Submitting such documentation early will help the process along. If you have problems obtaining a local authority search then you might want to discuss an indemnity insurance policy with your solicitor, but your lender will need to approve this as well so if in doubt talk to your adviser too.
Lastly, in a strong property market vendors and purchasers can be tempted to use tactics like gazumping and gazundering to make the deal a little better for them. This often causes chains to break down. We suggest that although you can’t stop someone else from trying to alter the prices in their favour, you can be clear from the outset with all parties that you have no intention of changing the agreed terms without exceptional reason to at least discourage the practice and ask the same of them.
Buying a new home or even a buy-to-let should be an exciting time, but the added pressure of meeting the looming Stamp Duty deadline can quickly turn this excitement into stress. So, to make sure things run as smoothly as possible and you don’t miss the Stamp Duty deadline, you and the various parties working on your transaction must make a concerted effort to keep things constantly moving forwards.