SDLT Holiday Extension Deadline
(Last Updated: 29/11/2023)
02/07/2021
2,029
8 min read
What is the land transaction tax holiday?
In July 2020 the Government introduced a 'Stamp Duty holiday'. This means that no Stamp Duty (SDLT) will be payable for many transactions and for others there will be a significant reduction.
SDLT holiday extension
The Stamp Duty Land Tax Holiday was extended to the 30th June 2021 for properties up to £500,000 and to the 30th September for properties up to £250,000. For completions after these dates and over the property price the normal rate of stamp duty will apply.
For some clients the SDLT holiday extension will have been the difference between being able to afford the purchase or not; and those of you will not be able to proceed if the holiday deadline isn't met.
The challenge is that There are some completions that won’t complete before the end of the SDLT holiday extension and the best advice is to ensure you can afford the normal rate of Stamp Duty Land Tax payable once the holiday term expires.
All clients are advised to budget for the additional SDLT. If you cannot afford to pay the stamp duty after the holiday expires then inform your solicitor immediately.
The challenge is that There are some completions that won’t complete before the end of the SDLT holiday extension and the best advice is to ensure you can afford the normal rate of Stamp Duty Land Tax payable once the holiday term expires.
All clients are advised to budget for the additional SDLT. If you cannot afford to pay the stamp duty after the holiday expires then inform your solicitor immediately.
Need tax advice on your property transaction?
- Get up-to-date property tax advice on SDLT, CGT, IHT, personal vs partnership vs company structure.
- Free 15-minute initial consultation with a qualified accountant from our panel of tax advisors.
- Ask your tax questions and get guidance on what you can do next.
- If further accountancy work is required, you'll be quoted for this as a separate piece of work with no obligation to purchase.
What could stop you from completing in time?
- 1
Conveyancing Searches – either you, or one of the buyers in the chain, cannot get their local search back in time for completion
- 2
Mortgage offer – either you, or one of the buyers in the chain, cannot get their mortgage offer in time for completion
- 3
Mortgage lenders – either you, or one of the buyers in the chain, cannot draw down mortgage funds in time for completion
- 4
Removals – either you, or one of the buyers or sellers in the chain, cannot vacate the property using their removals before completion
- 5
Localised lockdowns or infections – a party or a professional in the chain could be effected by a localised lockdown or through falling ill from the virus.
- 6
(if leasehold) Leasehold management pack and enquiries offer – one of the sellers in the chain cannot get their leasehold information pack, and or leasehold enquiries, with the freeholder in time for completion before completion.
All of these are external factors that fall outside of your solicitor’s control.
To ensure we give those chains the best opportunity to complete before the deadline, your solicitor will actively work on files where you have a mortgage offer or you are a cash buyer and the property searches are back/have an ETA of no more than 3 weeks.
This will give those clients who have their funding in place with property searches the best chance of achieving a completion before the End of the Stamp Duty Land Tax Holiday.
This will give those clients who have their funding in place with property searches the best chance of achieving a completion before the End of the Stamp Duty Land Tax Holiday.
What do the Law Society say about the SDLT holiday extension?
The Law Society, the independent professional body for solicitors, has told all of the conveyancing solicitors in England and Wales:
You may want to manage the expectations of your clients by making them aware that:
- Although you will do your best and liaise with others involved in the process to mitigate any hurdles, the speed of the transaction is outside your control and you cannot guarantee that transactions will complete before the end of the Stamp Duty Land Tax Holiday. This is especially the case where the transaction forms part of a chain.
- The solicitor is often the last link in the move, and it is only when the solicitor has all the pieces, which they are dependent on obtaining from others, that buyers and sellers can move.
- They might need a fallback clause in the contract making it clear that the contract is conditional on the SDLT concession being available and that they will not proceed without it – this would need to be agreed across chains which may not be easy to achieve.
- If they still want to proceed even if the SDLT concession is not available, others in the chain may not, which may mean that they will not be able to proceed in any event. Have you taken detailed instructions about this? If your clients do still want to go ahead, do they have the funds available to do so? Especially if they are in a chain, they need to understand the compensation payments - that might include unanticipated SDLT – if completion does not take place when expected or at all.
- If they exchange contracts but do not complete on the completion date, they may unwittingly become liable for SDLT and not only on their own transaction. To mitigate against these risks you may need to develop some policies for your firm so that, for example, you will not agree with completion dates of later than 20 June (20 September for properties under £250,000) and will amend the Notice to Complete timings so that the period is reduced to no longer than 5 working days. Be extremely careful about whether or not to make ‘time of the essence’. Rights to terminate in certain circumstances need to be discussed with clients.
- Their lender may have imposed a condition in the offer that the transaction can only proceed provided that the SDLT concession is available.
- Some sellers may have had searches carried out on the property they are selling to save time. Where these are available and meet your, your clients and your clients’ lenders’ requirements, these searches may assist in reducing timeframes.
Covid 19 Rider
What can you do to speed up the process to meet the SDLT holiday extension?
- 1
Organise your mortgage offer as soon as you can.
- 2
Buy without a mortgage. Often not an option, however if you can buy without a mortgage and then plan to refinance via a remortgage after completion you may have to wait 6 to 12 months as you can't refinance until the property is registered at the Land Registry. The Land Registry have a backlog and it may take longer than normal to register the property to enable you to get finance over the property.
- 3
Book property searches when contracts come in from the seller, or as soon as you instruct your solicitor. The risk here is if the transaction falls through you are out of pocket.
- 4
Get Delay Local Search Indemnity Insurance. If your local search isn't back until after the end of the SDLT Holiday Extension then you might opt to obtain the Delay Local Search Indemnity Insurance.
- 5
Book your RICS building survey when contracts come in from the seller, or as soon as you instruct your solicitor. The risk is the same as searches as you maybe out of pocket if you or the seller pull out - the survey often flags defects that could cause you to pull out.
- 6
Find out about the chain:
- Who is at the top? If a vacant property is being sold by a buy to let landlord then this will be quicker than if the property is vacant but being sold under probate. Some sellers who state they are top of the chain and moving into rented change their mind if they find a property to buy, so, be careful if the seller is living in the property.
- Who is at the bottom? A first time buyer could cause a long chain to collapse if they can’t get a mortgage, so, the chain will have more confidence as soon as the FTB has a MIP.
- Who is getting a mortgage? The mortgage application process is taking months not weeks. A seller will be more reassured once they know the buyer has a Mortgage in Principle, a stage on from the Decision/Approval in Principle, and even better if the valuation is booked.
- How long is the chain? One seller and one buyer is less risk than a chain with multiple sale and purchases. Risks such as failing to get a mortgage, solicitor delays, self-isolation or illness. On a chain of more than 3 people such as a sale + sale/purchase + sale/purchase + sale, can anyone in the middle break the chain, move into rented and buy at a later date chain free?
- Is anyone high risk? Find out if anyone in the chain is high risk and keep this in mind, as they may not be able to move if restrictions stop them from doing so.
What can you do if you miss out on the SDLT holiday extension?
If you miss out on the SDLT holiday extension and are liable to pay more stamp duty then you might be able to renegotiate the purchase price to account for the additional SDLT.
The seller may be open to discussing a price reduction rather than start over again with a new buyer.
The seller may be open to discussing a price reduction rather than start over again with a new buyer.
There are also some media commentators who are stating that property prices have been inflated by the SDLT holiday and they could come down after the 1st April.
In some transactions it might be better for the transaction to complete after the 1st April allowing for the price of the property to be renegotiated to a price lower then the SDLT holiday saving. Read more on this here:
In some transactions it might be better for the transaction to complete after the 1st April allowing for the price of the property to be renegotiated to a price lower then the SDLT holiday saving. Read more on this here:
SAM Conveyancing has a zero tolerance policy regarding abuse towards our staff.
With so many people in chains trying to complete before the end of the SDLT holiday extension, the stress levels will increase; especially if you are one of the clients who won't achieve the completion deadline.
If at anytime a member of our team or solicitors encounters abuse from you, whether verbal, physical or written then we reserve the right disengage from providing you with the instructed service. Abuse includes (but is not limited to):
- Using bad language or swearing at our team;
- Any physical violence;
- Racial abuse and sexual harassment;
- Persistent or unrealistic demands that cause stress to our team or service providers are not acceptable; and
- Bullying or threatening comments.
There is no excuse for abuse towards any member of our team or any of our service providers. If you abuse a member of the team we will disengage immediately regardless of how far progressed your conveyancing transaction is.
Written by:
Andrew Boast
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Reviewed by:
Caragh Bailey
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
