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One way to avoid an SDLT deadline clifftop




There is growing momentum across the property industry encouraging the government to review its stance on the cessation of the stamp duty holiday, which is currently scheduled for 31st March 2021.

At the ASTL, we would like to add our thoughts as to how all participants can benefit and, at the same time, help avoid a deadline calamity.

As the situation currently stands, there is a realistic possibility that customers who have commenced live transactions in the belief that they will benefit from a reduced SDLT bill may not complete by the deadline of 31st March 2021. This may well be through no fault of their own and yet they may find they are subject to a significant tax charge that they had not anticipated.

Unprecedented is a word that has been over-used this year, but the volume of transactions that have swamped the system since the stamp duty holiday was announced in July has indeed never been seen before . And this level of activity has come at a time when few businesses are able to function at full capacity given that they are accommodating home working and social distancing, plus other protocols that may be required as a result of Covid-19. These factors are likely to become a bigger consideration amid a second lockdown.

Consequently, delays are being reported at many of the stages in the mortgage process, from valuations and offers, through to conveyancing and searches. In the bridging market — famous for its fast turnarounds — we have seen the average time to complete a deal increase to 52 days, even though we know that lenders have still been able to issue offers relatively quickly.

So, what’s the answer? A simple extension of the stamp duty holiday will certainly help to maintain momentum in the market and may be required as an additional stimulus to the economy next year. However, this will also be costly to the Treasury and may lead to another deadline in the future, with similar problems.

Perhaps there is a simple solution: if borrowers who have a mortgage offer — many will still be going through the application process early into the New Year — but are unable to complete on or before the deadline, a period of grace would calm the mad and headlong rush. This could be a three- to six-month period allowing them to take advantage of the SDLT waiver, whilst enabling the re-introduction for new purchases after that deadline had passed.

 This would help everyone within the process, alleviating the need for lawyers to turn down new business on the grounds that it may not complete ahead of 31st March and also allowing prospective purchasers to relax, rather than run like lemmings at the stamp duty deadline clifftop.

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