Conveyancing facing "mayhem" as stamp duty hike looms
Harpal Singh, the Managing Director of conveyancing distributor Broker Conveyancing, has warned that the increase in stamp duty for second homes and buy-to-let set to come in at the beginning of April could cause “mayhem” for conveyancers.
Any sale not completed by 31st March will be subject to the new 3% charge which could lead to sales falling through and put serious strain on those offering “no completion, no fee” deals.
Easter falls at the end of March this year, and with buyers rushing to move in before the long bank holiday it seems the stars are aligning to create significant resource problems for firms.
And with recent figures from the National Association of Estate Agents (NAEA) saying the time from offer to completion for 29% of buyers could be as long as 16 weeks, time could already be running out for prospective landlords.
Harpal Singh said: “While I can partly understand why the Chancellor might wish to put the brakes on buy-to-let investment, the method of increasing stamp duty land tax for these purchasers will have a huge impact on the housing market as a whole and could result in a less than smooth process and, quite frankly, mayhem.
“The four-month notice period is incredibly short and it is likely to mean a very busy time for all stakeholders, particularly the conveyancing profession who are going to be pushed by all concerned to try and complete purchases before the 31st March next year.
“This will mean serious resource issues for these firms, especially when we factor in the double whammy brought about by the timing of the Easter break next year and the fact we’re not just talking about individual investment property completions but also the entire chains that they will sit within.”
Mr Singh also indicated some firms may look to put additional premiums on buy-to-let transactions to mitigate the risk of sales falling through.
Harpal Singh said: “Another conveyancing issue will be the ‘no completion, no fee’ deals currently on offer – if these buy-to-let and second home purchases do not complete then there is a greater likelihood of them falling through. It seems almost certain that buy-to-let conveyancing fees will rise in order to cope with this, the extra workload, and I wouldn’t be surprised to see some firms pulling back on their ‘no completion, no fee’ offers.
“It will be apparent to all advisers that ensuring their buy-to-let clients deal with specialist conveyancing firms is an absolute necessity in order to have that chance of securing a pre-1st April completion.
“Finally, we have to consider the impact on the market after this deadline is passed – we are likely to see a considerable slowdown and conveyancing firms, along with many other stakeholders, could move from feast to famine. Resource and business issues will need to be managed carefully in such an environment.”