It’s late February 2031, and Joe, 11, is asking his father about the past; “Dad, what did you do during the Great Pandemic of 2021?”
As a frown cast a shadow across his face, Simon turns wearily to his son, remembering a similar question he asked his grandfather about the Second World War. “It was a difficult and stressful time, completely taken up with buying our first house”. Joe looks confused; “But my teacher told me that everyone was volunteering in Boris’s Big Jab’s Army initiative giving vaccinations to the elderly and the vulnerable”. “Not me son – I spent most of that year on the telephone to my lawyer asking why we hadn’t exchanged yet. We did buy the house but it caused your mum and me so much stress we got divorced soon afterwards”.
“Sad story Dad. Still, on the positive side of things, the court order did say that you got to keep the TV you bought with the money you saved on Stamp Duty.”
Uncertain holidays from hell
As lawyers, we are the current-day travel guides doing our best to help our guests enjoy their great SDLT holiday experience. Sadly, unlike the brochures we’re normally browsing at this time of year, this holiday doesn’t have a happy sun-tanned ending. Instead, we’ll all be sporting a much paler complexion and will definitely need another holiday to get over this one.
We’ve seen the past few months bringing radically different concerns from clients, most of which reflect a desperate need for certainty. You know things are bad when having not been able to guarantee a selling client how many questions the buyers’ lawyer will ask, results in a 1 star review on Trustpilot.
Conveyancing is not an exact science at the best of times and gold-plated certainty is not available as an optional extra. (Even in that really really small print where lawyers normally hide those extra charges such as for answering the phone). However, given this commodity seems more valuable than Bitcoin right now, I thought it might be interesting to share our numbers to illustrate the impact the ever-approaching deadline will have on our clients.
A few numbers
Suffice to say, the cost savings for first time buyers are not life-changing and even second steppers will benefit from an increase in the value of their properties to off-set the additional tax.
Before the sound of virtual pencils being sharpened fills the air; our properties are mostly in London and the southeast. Of the current caseload, for the 33% that were instructed before January this year, the average price is £538K. This has a bearing for this article but obviously doesn’t reflect the national picture.
12% of our purchases are for first-time buyers, 75% of whom qualify for first-time-buyer relief. Of those that qualify, if they miss the deadline 67% will still not pay any tax, with the remaining 33% paying £1574 more on average – the price of a Samsung 65″ Smart 4K QLED TV with Bixby, Alexa & Google Assistant. ( This price does include a £300 discount from PCWorld).
For second time buyers, the 44% that are currently paying no SDLT, will owe an additional £8300 after March, compared to those just getting a discount, who will pay an additional £8800. Given that typical price rises in 2020 are quoted as between 5% and 10%, i.e. between £26K and £53K on a sale, this does outweigh those additional costs.
This is the bit we’re worried about
While we’d all like to save money, the more worrying aspect are the people that are saying they cannot afford the property if they don’t have the SDLT saving. The pressure these people are putting on chains is tough.
So here’s the thing.
Even in the good old days of 2019 when we didn’t despise everyone who came within 10 metres of us in Sainsbury’s, it never been possible to buy a property if you don’t have the SDLT.
Contrary to the nonsense peddled by ancient family friends who did a bit of property work in the 70’s, where a buyer has a mortgage, we have to show our clients have the money for SDLT before completion. It has to be in their bank account and there’s no sneaking off getting a cash advance from Barclaycard as we’ve seen some people try. Lenders don’t accept this.
Indeed, the only time the 14-day payment deadline after completion applies is to those who are not getting a mortgage. In other words, the minority of cases.
When did it become acceptable to have people taking such huge risks with other people’s lives buying properties they potentially can’t afford to buy?
Conclusion
The amount of stress everyone in the property industry is seeing is completely out of proportion with the costs involved.
Those that can only afford to buy a property because of the SDLT holiday are playing Rishi Roulette. But instead of playing with their own chips, they are gambling with the mental well-being of conveyancers, many of whom are suffering from being whipped by panel managers and a lack of support and protection from their management.
This appallingly misjudged affair will be felt by all those involved for many years to come. Experienced lawyers will leave the industry in despair and for some clients it will inevitably result in separation and divorce.
Which seems an awfully high price to pay for that flat-screen TV.