The much-anticipated Stamp Duty holiday extension brought relief to anyone already going through the sales process, especially the one in five buyers still waiting to complete purchases agreed last summer, according to Rightmove House Price Index figures in February. Many will feel the announcement has saved the day for the 300,000 buyers who stood to miss out – or risk a fall-through – because their purchase hadn’t completed in time.
But what does the extension mean for those who have not yet received or placed an offer? And if a property isn’t even on the market yet, is it still worth trying to beat the new deadline?
On the open market, the answer largely depends on the sale price because the Stamp Duty holiday only remains in place until the end of June for properties under £500,000 in England and Northern Ireland, or £250,000 in Wales. After that, the nil rate band threshold will be £250,000 until the end of September in England and Northern Ireland only.
Working on an average of four months from agreeing a sale to completion, as Rightmove reported in January, this means properties in the £250,000-£500,000 price bracket which are already progressing could feasibly complete before the end of June deadline, although this is by no means guaranteed.
The time frame is more flexible for lower-priced properties, making it still possible to market a property, find a buyer, exchange and complete before the end of September.
But as agents appreciate, when selling a property by private treaty, there are simply no guarantees. Averages only provide rough guidance so naturally some sales will take much longer – as those one in five buyers who had their offers accepted last summer know only too well. And fall-throughs are all too common, with almost a third of sales falling through in January, according to Rightmove.
For sellers looking to complete in a fixed time frame and capitalise on the Stamp Duty holiday, auctions remain the most viable way to do so without compromising on price – and without risking a fall-through. And this is something sellers can achieve through their regular estate agent, too.
We appreciate that auctions may not be the first choice for private home owners when it comes to selling their property so have been working hard in partnership with estate agents around the country to promote the advantages of auctions while dispelling the many myths.
To complete in a fixed time frame and capitalise on the Stamp Duty holiday, auctions remain the most viable way to do so without compromising on price – and without risking a fall-through.”
These misconceptions, which prevail even within the property industry, include the belief that auction properties must be bought with cash, when you can actually get a mortgage. And the old favourite about auction properties being sold for knock-down prices, when in fact the appetite for a hassle-free purchase and speedy completion means sellers frequently have their expectations exceeded.
With the Stamp Duty holiday extension by no means offering a cast-iron guarantee that any sale will complete quickly enough to benefit, there has never been a better time to get the message across to both sellers and agents that everyone can gain from an auction sale.
With an unconditional auction sale, contracts are exchanged at the fall of the hammer or when a Timed Auction ends. Completion usually takes place 20 working days later, unless otherwise specified in the legal pack. In a conditional sale, the end of the auction signals the start of an exclusivity period of 40 working days, during which exchange and completion must take place.
In both cases, the fall-through rate is less than 1% and the partner agent gets paid within just seven days of the sale being agreed; welcome news I’m sure in what has been a challenging 12 months.
Over the course of the pandemic, we have seen a significant increase in auction activity – in lot numbers, registered bidders and new partner agents – as we provide certainty in uncertain times. As the original stamp duty holiday deadline neared, this activity accelerated because even without the extension, buyers in our February auction would still have benefited because of the fixed completion date within 20 working days of the auction.
Auctions mean nobody needs to take a chance on the new Stamp Duty holiday deadline. There remain several opportunities to buy or sell a property and we would therefore urge agents to reach out to those clients who are struggling to complete their sales and offer them the chance of a fixed completion date through a sale by auction.
Andrew Parker is Managing Director and Auctioneer at SDL Property Auctions.