In July, we reported on the positive news surrounding the introduction of the stamp duty holiday, while also highlighting some of the increased risks associated with it. Since then, the government's initiative certainly appears to have had the desired impact, with Zoopla revealing in September that sales over the previous nine months were up 3% from the previous year despite lockdown and the widespread economic consequences of the pandemic.
While Zoopla's research showed that first-time buyer demand remains higher than 2019 levels, it is now on a par with that seen before the pandemic. However, home moves for existing homeowners – trading both up and down – is 37% higher than pre-Covid and up 53% year on year.
This is obviously great news for our conveyancer clients and for the wider economy. However, as we near the March cut-off date for the stamp duty holiday, there is an increase in some of the risks we identified regarding practices and their professional indemnity (PI) insurance policies, and these need to be urgently considered.
We are aware that the Home Buying and Selling Group (HBSG), which is a collaboration of trade bodies and industry groups that work together to find ways to improve the process for buying and selling properties, is lobbying the government. The group includes Bold Legal and the Law Society as well as the CLC, surveying, estate agency and removal associations. As impacted parties, they are trying to get the government to extend the holiday for a further six months and, importantly, to work with them to develop a smooth end to the extension as opposed to the cliff edge closure that currently exists.
Although the industry press has reported that an extension to the stamp duty holiday looks unlikely, the government says it continuously monitors the housing market so there may still be a chance it shifts in line with the HBSG requests. A change in government position is particularly important considering the dramatic increase in time taken for the average property transaction, which has risen from 12 weeks to 20 weeks.
However, until any change has been agreed and announced, we believe that practices need to take steps and make amendments immediately if they haven't already done so to mitigate the additional risks this situation poses. These include:
- Make sure you give appropriate risk warnings to your clients at the outset and prior to accepting instructions. Highlight that there is no guarantee they will be able to benefit from the stamp duty holiday and all relevant staff should explain this to clients both verbally and in writing as well as including it within the scope of their retainer letter. It is also worth pointing out the financial impact if the holiday is missed within your completion costing.
- Advise on the various challenges and potential delays that may occur. Emphasise the importance of receiving any required documentation to help reduce the chance of further complications.
- Agree a communication plan with your clients in terms of both their preferred method (for example telephone instead of email) and frequency. You do not want poor communication or lack of progress reports increasing the time your associates are on the phone and not actively progressing matters.
- Rushing work leads to greater risks. Practices need to be mindful of undue pressure being put on fee earners by clients. Appropriate supervision of staff is key.
- Consider the complexity of instructions and ensure you assign work to appropriately skilled individuals.
- Title – when instructed it's a good idea to explore the availability of title insurance for the property and discuss the benefits of this with your client in terms of helping overcome any potential risks surrounding title issues.
Perhaps the most importance point is to consider your practice's capacity level and your associates' workload. Although there is a natural temptation to make hay while the sun shines and onboard all matters that come through, make sure you do not get overloaded. Compromising quality over quantity could have serious ramifications long after the stamp duty holiday ends. It may be prudent to identify your capacity numbers per fee earner, and make sure there is some consideration for holiday and illnesses. Additionally, with Covid-19 still present, it's important to factor in the possibility that staff may be forced to shield.