Many will welcome the Government’s recent announcement detailing their roadmap to freedom by the 21st June 2021, if all goes well; and along with that comes confirmation in the Chancellor’s budget of an extension to the stamp duty land tax holiday from the 31st March 2021 to the 30th June 2021.
Formal plans were set out by the Chancellor, Rishi Sunak in his budget statement on Wednesday 3rd March 2021.
This will be a relief to many who are in the process of purchasing a property and are likely to miss the 31st March 2021 deadline. However, sceptics would urge that this extension would only benefit those already in the process, and allow those completions to take place with the benefit of the holiday. The difficultly for firms will be determining exactly what stage the transaction has to reach before deciding if it should benefit from the holiday. As we are aware, the parties are only committed after exchange of contracts; and any agent’s memorandum of sale is no more than the paper it is written on. It is unlikely that new instructions will meet the new extension date of the end of June.
There are calls on the Government to scrap the stamp duty land tax charge and bedroom tax and replace with a more reasonable property tax, with a flat-rate payment based on the current value of the property. This formed part of a petition organised by Fairer Share Campaign, which has been signed by more than 105,000 people.
In our previous article, “SDLT Holiday: Insurers Fear Hotspot for Claims as Deadline Looms” we detailed Insurers concerns on this particular area and likelihood of claims increasing when the holiday deadline ends. With the new deadline, the same concerns from the 31st March 2021 deadline remain, with the possibility that some transactions will miss the new deadline of the end of June 2021. This could lead to a number of disappointed clients looking to pick holes in the conveyancing transaction itself and point fingers at firms, alleging that the solicitor caused the delay, resulting in the client being out of pocket having missed out on the land tax relief.
With the above in mind, firms should ensure by way of best practice that the following mitigation points are considered to reduce the likelihood of client complaints and claims in this area.
Manage client expectations:
- Consider including some disclaimer language in your engagement letters to clients.
- It is best practice to clearly emphasis in writing any warnings about the SDLT holiday deadline to your clients; and not just rely on language contained in the engagement letter.
- Alternative means of communication – consider including information and disclaimer language on your email footers as well.
- Raising awareness of the issue and the any potential delays will prevent claims in this area.
- Ensure that buyer mortgagee’s funds are requested well in advance, to prevent any delays occurring here.
- Consider pointing out to clients that the SDLT holiday benefits the purchaser and that completion dates are subject to agreement of both parties - so unless the vendor is buying a property, which also benefits from the holiday, they do not have quite the same incentive to complete within the deadline.
- Consider reviewing workloads and client instructions to highlight and create a priority list of transactions, which may or may not meet the deadline, and then manage your client’s expectations accordingly.
Further guidance can be found in our previous articles on this topic area, but if you have any questions, please contact the Miller's Solicitors team.