Save, make, understand money

First-time Buyer

Homebuyers should start process by November to net stamp duty savings

Paloma Kubiak
Written By:
Paloma Kubiak

Homebuyers hoping to benefit from the current stamp duty holiday have been warned to begin the transaction by 1 November or risk missing out.

Homebuyers have until the end of March 2021 to complete a purchase and pay no stamp duty on purchases below £500,000.

However, bumper levels of activity and demand in the housing market since it re-opened in the summer has left lenders, solicitors, and surveyors with a backlog of cases that is causing delays to the homebuying process.

Legal & General Mortgage Club found those who need to sell their home and find a new property will need to allow nearly four months for the transaction to go through.

The mortgage club surveyed a range of stakeholders in the housing market, including estate agents, surveyors, conveyancers, and housebuilders to build an estimated timeline for a typical housing journey given the current delays.

Stamp duty rush and Covid create delays

Before the pandemic, a mortgage application for a buyer with straightforward circumstances typically took less than two weeks to move to mortgage offer.

But since the re-opening of the mortgage market, advisers have found this process is taking much longer – one third said it is taking three to four weeks with a further third saying it is taking four to eight weeks.

Those with more complex backgrounds, such as those with impaired credit histories or who have been on furlough, may need to allow up to six to eight weeks to get approved for a mortgage.

On top of mortgage delays, other elements of the housing sector are also trying to manage demand and the ongoing impact of Covid-19 on their businesses.

Conveyancers indicated that the time between offer and exchange is now taking three weeks, while the period between exchange and completion stands at one to two weeks.

Responses from estate agents also indicated that the average time between receiving an offer on a property and completion has increased by some eight weeks.

It means the average homebuying timeline could be up to 15 weeks – or 17 weeks for buyers with more complex requirements.

However, this figure does not take into account the holiday season nor the impact of a possible second lockdown, and prospective buyers should take this into account in their plans.

Legal & General has therefore suggested buyers need to begin their search by 1 November to take advantage of the stamp duty holiday to give themselves enough breathing space should any issues arise before completion.

Taper the deadline

Kevin Roberts, director, Legal & General Mortgage Club, said: The government’s stamp duty holiday has helped to encourage many hopeful buyers to press ahead with their homeownership plans, providing a much-needed boost to the economy.

However, those wishing to take advantage of the holiday will need to plan carefully to avoid missing the March 2021 deadline, particularly if they have their own property to sell first.”

He added: “As homebuyers rush to take advantage of the stamp duty holiday, policy makers need to consider if a tapering of the stamp duty deadline is needed instead of a hard deadline.

We need to avoid those moving or purchasing a home missing out through delays after 31 March when the holiday ends.”