What can you do if your chain breaks before the stamp duty holiday ends? Read below to find out more...
Broken Property Chain
There are many reasons a property chain breaks down, and if it happens to you, you are certainly not alone. A recent Spring survey revealed that out of 1,000 respondents, 47% had an offer fall through. This anguish of a chain break is unfortunately not uncommon. Now more than ever, property chains are highly volatile and are breaking down more frequently due to the devastating effects of the Covid-19 pandemic.
Chain breaks can be down to one of the parties involved in the chain suddenly changing their mind, illness, redundancy, or relationship breakdown. Other reasons of chain failure can include;
- Not being able to secure a mortgage
- Gazumping: this is when a seller accepts a higher offer from another buyer last minute.
- Gazundering: this is when a buyer lowers their offer at the final moment and the seller is unable to accept the offer.
- A link of the chain unable to find a property they want to buy
- A survey revealing structural issues
- Asbestos presence that may prove costly to remove
With the added pressure of the stamp duty holiday deadline fast approaching at the end of March, chains are prone to breaking more than ever.
With Rightmove reporting over 613,000 sales agreed in the property pipeline at present and the average sale currently taking 126 days from the time an offer is accepted until legal completion, many homeowners are facing their chain breaking due to complications beyond their control and could miss out on the potential savings the stamp duty holiday which determine their future move.
But, is it too late to complete your home sale before March 31st
2021? Here we guide you through the bumpy road ahead during lockdown to take advantage of the savings on offer and discuss the ways you can still win the ‘stamp duty’ race if your chain breaks.
What is stamp duty?
Stamp duty is a tax that is paid by those buying a property and rules on stamp duty vary on where you live in the UK. It is applied to anyone buying a residential property or a piece of land. The tax applies to both freehold and leasehold properties - those buying outright or with a mortgage.
Stamp duty for new build properties are charged differently as are those for first time buyers. The tax uses a number of bands and is calculated on the part of the property purchase price falling within each set band. The standard rates (outside the ‘holiday’) are outlined below:
|Up to £125,000
|The next £125,000 (the portion from £125,001 up to £250,000)
|The next 675,000 (the portion from £250,001 up to £925,000)
|The next £575,000 (the portion from £925,001 to £1.5)
|The remaining portion over £1.5million
The Stamp Duty Holiday
Chancellor Rishi Sunak announced a stamp duty ‘holiday’ in his Summer budget statement that came into effect on July 8th
2020 and has been available ever since. The Chancellor hoped his announcement, which potentially saved buyers thousands of pounds, would kickstart the housing market after the first National lockdown and boost the economy.
In the bold move lasting till March 31st
2021, the Chancellor increased the threshold of stamp duty payable when buying a home from £125,000 to £500,000, giving buyers the opportunity to save £15,000 on the purchase of properties £500, 000 or more. The table below, gives a quick overview;
|Min purchase £
||Max purchase £
||Stamp duty rate %
|Over £1.5 million
Since the holiday announcement there has been a dramatic surge of home-owners wanting to move to take advantage of the ‘holiday’ and grab a slice of the potential savings.
The Chancellor hoped his stamp-duty holiday would entice more people to move and not delay till 2021 and beyond, his plan worked and sales in the UK since the holiday announcement have boomed with Zoopla citing an increase of 50% against the same period in 2019.
When does the stamp duty holiday end?
Like all holidays it must soon come to an end, and buyers / sellers are now scrambling to complete their purchases and pack up their belongings before the March 31st
The volume of transactions and the knock-on effects of 3 national lockdowns, has somewhat backfired now with conveyancers, mortgage providers and valuation teams all stuck in a large bottleneck and struggling to complete sales. The delays that are rippling through the housing market could potentially see thousands of home buyers miss out on the savings they have critically budgeted for in their home move.
Fixing a broken property chain before March 31st
The average home sale can take just over 100 days from the acceptance of an offer when selling through an estate agent according to Zoopla
, but delays currently being felt by those ‘behind the scenes’ and the high volume of transactions stuck in the pipeline, the chances of completing by March 31st
would be highly unlikely.
Suffering a broken chain at this very late stage, with the current delays, is making buyers have to go right back to the start and begin their property journey again – which is devastating for home owners, especially if your sale was dependent on the SDLT holiday.
In normal circumstances, putting the house back on the market may be an option but as there is more of a time limit than usual, the open market may not be the best method. Instead, sellers have more security and guarantee when they use a home-buying service such as Spring.
Why sell fast ahead of the SDLT holiday ending?
The start of a new year and announcement of a 3rd
National lockdown has brought about increased stresses and demands for many homeowners, with the need to sell a property now more prevalent than ever for many. But, if you haven’t sold your home yet and want to move, there are still ways to take advantage of the stamp duty holiday savings, sell up on time and beat race to the stamp duty holiday deadline on March 31st.
Selling your home to a home buying service, like Spring, can make yourself chain free and become a cash buyer. This is a great way to cut the length of a property chain, putting you in a stronger position to complete and make your planned move on time.
When it comes to selling your home, there are many reasons why owners want to sell quickly. Whether you are fixing a broken chain, relocating, retiring, downsizing, going through financial difficulty, struggling with ill health, facing a sudden change of circumstances, suffered a death in the family, a relationship breakdown or you simply just want to sell your home without delay to take advantage of the stamp duty savings - Spring can help.
Spring offer a guaranteed completion, whereas estate agents and the open market do not. Spring will buy your home on your timeline providing you with the guaranteed sale you need to get you’re your planned move back on track.
With time being such an important factor, we can complete within as little as seven days, or in a timeframe that suits your onward move.
Having the chain break when you were so close to completing your move is frustrating and can often set you back several months. Add to this the added pressure of getting the purchase over the line ahead of the Stamp Duty Holiday ending, buying and selling your house could potentially be more difficult than usual.
By enlisting the help of Spring, we can guarantee that if your buyer drops out and the chain breaks, we can be on hand to ensure a fast sale to keep you moving in time for the 31 March 2021. Contact us to get your sale back on track and get your property chain moving again.
Will I be able to sell my house fast for market value?
We value properties based on a remote review of your property by 2 of our experienced Property Buyers and 1-2 local estate agents as well as an on-site visit by a surveyor from the Royal Institute of Chartered Surveyors. Our extremely thorough method will derive the true value of your home with greater accuracy than any single estate agent trying to win your business. We will share all of these valuations with you so you can see how we arrived at our figures.
Will I have to pay Stamp Duty for a second home?
The Stamp Duty Holiday covers the purchase of the property however you will still have to pay the 3% second home surcharge.