House purchase before end of stamp duty holiday

lf93

Hi everyone,
First post in this thread so hope it's in the right place. We are planning on selling to buy our next house to move - we have found the house we wish to buy and our house has just gone on the market. Our rate limiting steps are: we need to sell (although we are confident this would happen quickly), the vendors from whom we wish to buy need to find somewhere to live, we are using a LISA (so processing time from when conveyancer wants to access funds), BUT we simply wouldn't be able to go through with the purchase if if ends up completing after stamp duty comes back (so theoretically the end of the tax year - but lots of calls for it to be extended, no confirmation if this will happen yet).

I am a first time buyer but my partner is not, but his house purchase was reasonably straightforward with no chain at all.

Any advice/tips/tell us we are being overly optimistic that this would be able to work and all go through within 4 months?

Also, are we right in thinking that if we exchange with a view to completing before the deadline, but there is a delay and completion is delayed, and we have to pull out, we lose our entire deposit...? We were thinking of asking conveyancer to draw up papers to prevent this happening - we are aware that we would lose all fees (agents, legal etc.) but that is nothing compared to losing deposit which would include the roof over our heads!
Thanks

(Edit: formatting)

pinkteapot

Just on your last point.... You simply can’t exchange if you have any doubt about your ability to complete. There is no mechanism by which your solicitor can protect you from the costs. Once you have exchanged, if you pull out you lose your deposit (usually 10% of the purchase price of your house) and the entire chain can sue you for their costs. (Technically, people have to sue the person they were buying/selling from, not you directly, but all those costs would come up/down the chain towards you as it was your fault).

It’s fairly moot anyway because your scenario can’t happen - the completion date is fixed upon exchange and can’t be delayed.

If you can ONLY afford to complete with the stamp duty benefit still in place then only exchange with a completion date that falls within the window. The completion date is legally fixed upon exchanged so you won’t be in a position of exchanging without knowing whether completion will be at the right time or not. 

If the stamp duty holiday expires then you simply pull out before exchange.

The only instance in which exchange happens with a flexible completion date is when someone is buying a new-build. If your vendor decides to buy a new-build then they may ask you to do the same thing. You can say no (because you need fast completion) and if they want to keep you as a buyer they’ll have to move into rented or other temporary accommodation while they wait for their house. 

joe90mitch

Hi - I can comment on the aspect relating to the LISA withdrawals. Your solicitor can actually do this at any time - they can either put down an indicative completion date, or leave it blank and it will be transferred to them after 30 days. They can hold the funds for 90 days (and apply for extensions). So I don't think you need to worry on this front. I would speak to your solicitor about this and ask if they can request the transfer of funds as soon as you're getting nearer to the endgame.

I was stressing about this last week - found out last Thurs that the chain wanted to exchange on Fri (i.e. day after) after us thinking we were ready and no one else was, but then it turned out our solicitor had only sent the application to transfer funds to Skipton when she heard everyone was ready to exchange - i.e. Thurs. Cue us getting phone calls from the seller's estate agents asking if it was true we weren't ready to exchange and there was an issue with our LISA haha. I rang up Skipton, who told me to get my solicitor to ring them up - she did on Friday morning and Skipton transferred the funds 1pm Friday.

I mean, you don't want the stress of that, just using it to highlight that it doesn't necessarily cause delays.

Again, that's all just relating to the processing of funds. No idea on other aspects of the LISA, such as only one of you being FTBers - but I imagine you've researched all that

Scotbot

The SDLT holiday ends March 31st, taking into account Xmas thats just over 3 months away. In normal times house sales take on average 3 months but with Covid they are taking much longer.  Given you need to sell and your vendors need to find somewhere I think there is almost no chance of completing this before end of March.

Who knows what will happen with SDLT, it may be reinstated , the holiday may be exte ded or  allowances may be made for ongoing transactions. No one knows.  You can go ahead and wait to see what happens, if SDLT is reinstated  you can always drop your offer to account for SDLT, your buyer may refuse or they may haggle on their purchase to allow for it. If they refuse then you can pull out of the purchase. 

lf93

pinkteapot said:

Just on your last point.... You simply can’t exchange if you have any doubt about your ability to complete. There is no mechanism by which your solicitor can protect you from the costs. Once you have exchanged, if you pull out you lose your deposit (usually 10% of the purchase price of your house) and the entire chain can sue you for their costs. (Technically, people have to sue the person they were buying/selling from, not you directly, but all those costs would come up/down the chain towards you as it was your fault).

It’s fairly moot anyway because your scenario can’t happen - the completion date is fixed upon exchange and can’t be delayed.

If you can ONLY afford to complete with the stamp duty benefit still in place then only exchange with a completion date that falls within the window. The completion date is legally fixed upon exchanged so you won’t be in a position of exchanging without knowing whether completion will be at the right time or not. 

If the stamp duty holiday expires then you simply pull out before exchange.

The only instance in which exchange happens with a flexible completion date is when someone is buying a new-build. If your vendor decides to buy a new-build then they may ask you to do the same thing. You can say no (because you need fast completion) and if they want to keep you as a buyer they’ll have to move into rented or other temporary accommodation while they wait for their house. 

Thanks for the reply - regarding the completion date being fixed, if another party pulls out/delays for some other reason - I assume THEY are in breach of contract and are 'at fault'. But if this meant we had to pull out too (because the date would be beyond 31st March) - are we liable to lose our deposit too and be sued for other parties' costs?

davidmcn

lf93 said:

pinkteapot said:

Just on your last point.... You simply can’t exchange if you have any doubt about your ability to complete. There is no mechanism by which your solicitor can protect you from the costs. Once you have exchanged, if you pull out you lose your deposit (usually 10% of the purchase price of your house) and the entire chain can sue you for their costs. (Technically, people have to sue the person they were buying/selling from, not you directly, but all those costs would come up/down the chain towards you as it was your fault).

It’s fairly moot anyway because your scenario can’t happen - the completion date is fixed upon exchange and can’t be delayed.

If you can ONLY afford to complete with the stamp duty benefit still in place then only exchange with a completion date that falls within the window. The completion date is legally fixed upon exchanged so you won’t be in a position of exchanging without knowing whether completion will be at the right time or not. 

If the stamp duty holiday expires then you simply pull out before exchange.

The only instance in which exchange happens with a flexible completion date is when someone is buying a new-build. If your vendor decides to buy a new-build then they may ask you to do the same thing. You can say no (because you need fast completion) and if they want to keep you as a buyer they’ll have to move into rented or other temporary accommodation while they wait for their house. 

Thanks for the reply - regarding the completion date being fixed, if another party pulls out/delays for some other reason - I assume THEY are in breach of contract and are 'at fault'. But if this meant we had to pull out too (because the date would be beyond 31st March) - are we liable to lose our deposit too and be sued for other parties' costs?

Why would you want to exchange before you're certain about being able to complete?

lf93

davidmcn said:

Why would you want to exchange before you're certain about being able to complete?

I'm just imagining a situation where a completion date is chosen on exchanging, but another party in the chain after exchange has to delay or withdraw. I'm not sure how common that is, but it would mean we would have to pull out too, so I'm not sure if that makes us as liable as them. 

RelievedSheff

Scotbot said:

The SDLT holiday ends March 31st, taking into account Xmas thats just over 3 months away. In normal times house sales take on average 3 months but with Covid they are taking much longer.  Given you need to sell and your vendors need to find somewhere I think there is almost no chance of completing this before end of March.

Who knows what will happen with SDLT, it may be reinstated , the holiday may be exte ded or  allowances may be made for ongoing transactions. No one knows.  You can go ahead and wait to see what happens, if SDLT is reinstated  you can always drop your offer to account for SDLT, your buyer may refuse or they may haggle on their purchase to allow for it. If they refuse then you can pull out of the purchase. 

I agree with the above. With the time you have left you have next to zero chance of completing before the end of March deadline. You need to find a buyer for your property and the chain isn't complete above.

If you can't complete on this sale if you have to pay stamp duty then I would suggest that you pull out now rather then wasting everyone else's time.

pinkteapot

lf93 said:

Thanks for the reply - regarding the completion date being fixed, if another party pulls out/delays for some other reason - I assume THEY are in breach of contract and are 'at fault'. But if this meant we had to pull out too (because the date would be beyond 31st March) - are we liable to lose our deposit too and be sued for other parties' costs?

Short answer: Yes

But honestly, transactions simply don't fall through after exchange. It's incredibly rare. Most solicitors will never have had a case in their whole career. Very occasionally completion is delayed by a day or two because of a screw-up with the bank transfers, but even that is very, very unlikely. Someone changing their mind or suddenly not being able to complete is almost unheard of. There was one famous long thread on here a few years back where it happened and ended up being pursued through the courts. That's the only one I've ever known in my life.

In normal times people typically only have a couple of weeks between exchange and completion (the amount of time is up to people in the chain, and normally a negotiation as some want longer than others). However, at the moment, with Covid slightly increasing the chance of a failed completion, solicitors are advising clients to exchange and complete on the same day - in which case there's no chance of it falling through in between. 

As others have said, your chances of completing before the end of March from this point are slim. It's possible, but you'd need to find a buyer and your vendors would ideally need to find a place with no onward chain - both of these would need to happen VERY quickly in the new year. You'd certainly want the chain complete (everyone has picked a house from a chain-free buyer at the bottom to a chain-free seller at the top) by say 8 Jan. Then everyone in the chain would have to be extremely organised and make it happen about as quickly as it possibly can as you'd have 11.5 weeks. Even then, searches are taking longer than normal at the moment and may simply delay the process too long.

That being said, when we last sold we were top of the chain (of 3) as we went into rented, and we went from offer to exchange in 5-6 weeks. So it's possible, but as I said, searches are the main delay right now. Plus I think mortgage applications may still be taking a bit longer than normal.

manc_doc

I think you are optimistic being in a chain and hoping to complete by the end of March. We've just sold - no chain either side as FTB and we moved into rented. It took 5 1/2 months from accepting the offer to completion, no issues with mortgages - not even any survey done beyond basic mortgage valuation. 

Add to this that everyone already in a chain will have the same deadline as you, solicitors will be overwhelmed. I don't think it is a realistic plan as so much is outside your control. 

jimmyjammy001

I quite certain you can not claim the funds from a LISA if you are buying with someone who has allready brought a house in the past, you both have to be FTBs in order to claim the LISA government top up