When it comes to housing transactions, each will have their own specific deadline when all parties want to complete. As we will all know, getting to that point, is much easier said than done however when you throw in a further, somewhat arbitrary deadline on top, then you start to feel that securing that date may simply be a case of wishful thinking.
Having spoken to many brokers, agents, and conveyancers in recent weeks, we are fast approaching what Sir Alex Ferguson might have described as “squeaky bum time” for many potential purchasers and vendors. The reason of course is the impending stamp duty change which ups charges by 3% for those purchasing an additional property after the 1st April.
Given such an increase it has not been surprising to see so many landlords in particular seeking to purchase before the end of March in order to get out of paying that extra cost. However, the pressure this is putting on the conveyancing sector and all those involved in a transaction such as brokers, lenders, surveyors, search providers is intense.
With barely a month to go until that deadline kicks in, we are at a point where some purchasers may well think that achieving their completion date is not viable. So, what happens next because if that purchaser is in a chain, then it won’t just be their property purchase they’re affecting but potentially many more? In essence, are we going to start to see a large number of fall throughs due to the fact those transactions now have little chance of meeting the completion date?
Well, the answer has to be yes, however the important point – and here is where brokers will have a very strong role to play – is that with a degree of manoeuvrability and some compromise it may well be possible to keep the deal moving forward. Firstly, will the purchaser want to recoup the extra stamp duty cost up front? The answer is likely to be yes. If so, will the vendor be willing to cut their asking price by that specific amount? Many won’t, as they’ll be relying on that extra money to make their next move, however if it’s a case of getting to the point of exchange rather than going back to square one then perhaps they will be open to renegotiation. Even if an agreement can be reached to meet somewhere in the middle it may well be better in the long-run to work this out, rather than call the whole thing off.
Brokers, agents and conveyancers have a clear incentive to work closely together here because there will be a willingness to get a transaction completed on all sides, however when it comes to price changes, there is always likely to be reticence. Specifically in the case of landlords purchasing investment properties, there will also be a clear budget and the numbers will be available to make those decisions. Indeed, if a deal cannot satisfy a landlord then there is little incentive for them to keep pushing a deal through. They may be far more willing to walk away as they are not reliant on moving at the same time – with these types of clients far more work may be required, and far more compromise on the side of the vendor, in order to keep a transaction on track.
The obvious point for brokers here is to keep communicating with all parties, especially your client but also those others involved. Plus if it’s looking increasingly unlikely that a completion can be achieved before the end of the March, tackle this issue early so that negotiations can be held straight away and preparations made. A decision to walk out on the deal may not be necessary if all parties can get to a compromise, but there is not going to be much chance of this if everyone leaves it to the last minute.
Hopefully your client will be in the capable hands of a specialist conveyancing firm that will be able to do all they can to a) firstly hit that deadline and b) if it’s not possible, to work closely with everyone to try and make that deal still happen. Admittedly, it can seem rather a fraught time for all concerned but if these issues are not ignored, are tackled head-on and early enough, then there still may be a conclusion achievable that suits all. The message has to be, don’t leave it too late.
Harpal Singh is managing director of BrokerConveyancing.co.uk