Stamp Duty Holiday – Time to get a move on?

In July, the Chancellor announced a stamp duty holiday for certain transactions. Housing market activity had already bounced back after lockdown and this further increased demand. So what effect has this had on the house buying process? When should you start the process in to order avoid missing the stamp duty break?

What is the Current Stamp Duty Holiday?

The Chancellor announced in July that a stamp duty holiday would be put in place until 31st March 2021.

As it stands, stamp duty is exempt for purchases up to £500,000. On a standard purchase, this represents a saving of up to £15,000. For second properties and most buy to let, the 3% levy still applies. This means there will still be stamp duty payable of 3% up to a purchase price of £500k, but a saving of up to £15,000 can still be made.

How Long Is the Current House Buying Process Taking?

Every set of circumstances is different. However, there is no doubt that the Coronavirus situation has had an impact on every part of the house buying process.

Since the end of the first lockdown, Estate Agents and Surveyors appear to have adapted well. The increased demand seems to have had a relatively small impact on their processes.

It seems that the same cannot be said for arranging a mortgage and the legal process. An increase in demand combined with a disruption in work practices has had a knock on effect.

Before March, we would have said that a straight forward purchase between two parties would have taken approximately 2 – 3 months. As a rough guide, we would then add another 2 – 3 weeks for each link in the chain.

However, at the moment we would say that you should allow approximately 3 – 4 months with another 3 – 4 weeks for each link in the chain. This is to allow for the delays with mortgages and legal work due to current work load, working practices and resource.

How Long Does it Take to Arrange a Mortgage?

In January, we would have said it took approximately 10 – 15 working days on average to go from mortgage application to formal offer.

At the moment, we would push this estimate to 20 – 30 days. The timescale will dependent on the lender’s turnaround time and a person’s individual circumstances.

It feels like pretty much every lender has been affected and is experiencing some kind of delay. As for applicants, it’s likely that some may be subject to close scrutiny i.e. the self employed.

Time To Get Moving?

Of course, predicting timescales is not an exact science and every set of circumstances is different.

However, if saving stamp duty is a key factor then it’s advisable to start the process sooner rather than later.

Legal and General have estimated that the cut off point to ensure saving on stamp duty is the 1st November. The Telegraph reported that 200,000 people could miss out due to the current turnaround times.

There are some who are calling for an extension to the deadline, but as it stands it remains at the 31st March 2021.

For people who are considering a move and want to guarantee making the most of the stamp duty holiday, it might be time to get a move on.

If you’d like to discuss your plans, contact us for a free consultation with no obligation.