The latest stamp duty holiday is over, meaning buyers need to be aware of the implications to their chain and mortgage offer, says Derek Inkpin from local solicitors Wiseman Lee
All good things, as we know, come to an end. The amount of financial help given by the government since March 2020 in the relaxation of Stamp Duty Land Tax (SDLT) rules has been considerable and with it, a knock-on effect on price increases. Gazumping has reappeared in some cases. But the SDLT holiday ended on 30 June.
With effect from 1 July 2021, the £500,000 threshold for UK main residence property reduces to £250,000 until 30 September 2021, and then from 1 October 2021, the threshold reverts to its previous level of £125,000. If you are buying an additional property, whether as a buy-to-let or a second home, a 3% surcharge applies to the current SDLT regime.
Whether you can still make an SDLT saving up to 30 September 2021 depends on the chain. A short chain of transactions should mean exchange of contracts and completion by 30 September, but unless as a buyer you are aware of these changing rules, don’t forget that an increase to SDLT could take you beyond your budget. Even if as a buyer you are financially OK to proceed, it is worth checking that the other buyers in the chain have the funds to pay the new SDLT rate due up to 30 September and, of course, even worse, if completion takes place after 1 October.
Another point worth checking is the fine print of your mortgage offer and whether the lender has imposed a condition that the purchase can only proceed providing the SDLT concession is still available.
In areas where there are significant delays in obtaining searches, it might be possible to obtain a personal search or, at additional cost, search delay insurance. However, in each case, it will be necessary to check with the lender whether either of these measures is acceptable because if not, the delay in exchanging and then completing after September will likely upset the SDLT apple cart.
Change of subject – for many years, people selling properties subject to Capital Gains Tax (CGT) could report their CGT gains and pay their tax in the next financial year. Not so now – from 6 April 2020 in the sale of taxable residential properties, CGT tax returns and the payment due must be made within 30 days after completion of the sale. Do this late and you will become liable for interest on late payment and possibly HMRC penalties.
Finally, a new Ground Rent Reform bill is proceeding through Parliament. The aim is to stop onerous and rising ground rents from affecting future long leaseholds. The scandal of doubling ground rents every few years needs to be resolved urgently. Hopefully, this will become law in 2023.
Wiseman Lee is located at 9–13 Cambridge Park, Wanstead, E11 2PU. For more information, call 020 8215 1000