For the significant number of our clients that undertake residential conveyancing, the changes to SDLT introduced in 2020 have served as a catalyst for a better than expected number of transactions completed across the English property market during the Covid-19 pandemic;  “Good news for law firms” many outside commentators would be forgiven for speculating. Whilst the SDLT lever was certainly a vital instrument in 2020, as we headed in to 2021, SDLT continued to stoke debate, a number of firms were grateful for the certainty the cut-off provided, others were concerned with the “cliff-edge” impact that was likely to be experienced.

In late February it became clear that HM Government had taken the decision to reverse their original intentions, albeit such a decision was still clouded in mystery, with impacted stakeholders having to wait until clarity was finally provided in the budget announced by the Chancellor on Wednesday 3rd March.  The announcement was as expected, and the SDLT measures have been both extended and then altered as follows:  

Purchases completed before 1st July 2021

Property or lease premium or transfer value

SDLT rate

Up to £500,000

Zero

The next £425,000 (the portion from £500,001 to £925,000)

5%

The next £575,000 (the portion from £925,001 to £1.5 million)

10%

The remaining amount (the portion above £1.5 million)

12%

 

Purchases from 1st July 2021 - 30th September 2021

Property or lease premium or transfer value

SDLT rate

Up to £250,000

zero

The next £675,000 (the portion from £250,001 to £925,000)

5%

The next £575,000 (the portion from £925,001 to £1.5 million)

10%

The remaining amount (the portion above £1.5 million)

12%

 

After the budget announcement, Law Society president David Greene commented that buyers and sellers would “breathe a sigh of relief”, and the reduced concession from July to September would “help to reduce the risk of a future cliff edge for consumers”.

He added: “Nonetheless, the design of the extension and tapering of the holiday could encourage consumers to begin new transactions in the expectation of benefitting from the scheme, so the government should remain vigilant to ensure fairness, stability and confidence in the market as the holiday comes to an end.”

Estate agency business Right Move have also commented in recent days that nationally, the average time for a seller to find a buyer is currently 65 days, and that it takes a further 126 days to go through the legal process to completion.

The merits or otherwise of the decision are not within our remit to analyse, albeit certain principles still apply, rates will still change and our valued clients still face increased risk. Brian Boehmer from Lockton Solicitors commented in both July and November 2020 as to the appropriate steps to mitigate risks, such advice is still important between now and September 2021.

What is without question is that the extension and subsequent alteration to SDLT rates will ensure that those firms in England who provide residential conveyancing services will continue to be busy in the months ahead. Please do consider the risks presented, and come renewal be prepared for insurers to ask how increased volumes were managed and what processes have been put in place to monitor staff caseload and wellbeing.

Should you have any questions on this topic, or seek further guidance as to the perception of insurers, please do not hesitate to contact your Lockton representative.