Mortgage brokers told to ‘manage expectations’ on stamp duty deadline
Borrowers need to be prepared to pay higher stamp duty if they miss the deadline at the end of March.
In April the minimum stamp duty threshold will revert from £250,000 to £125,000; while for first-time buyers it will revert from £425,000 to £300,000.
Robert Sinclair, chief executive at the Association of Mortgage Intermediaries, said:
“The end of any homebuyer incentive inevitably distorts the market for a period and results in disappointment for those who miss the cut-off point.
“Managing mortgage borrowers’ expectations is of primary importance at such times as these. Brokers and lenders are working hard to complete on as many affected cases as possible before 1st April, but there will no doubt be many which don’t beat the deadline.
“While no-one wants to be the bearer of bad news, it is better to have a well-informed client prepared for potential higher buying costs than one who is both disappointed and surprised.”
It currently takes average property transactions five months (151 days) to complete, which means buyers who did not kick off their mortgage application before the end of October could miss the deadline.
After October’s Budget, which confirmed there would be no extension of these rules, there was an uptick in first-time buyer demand, exacerbating the inevitable bottleneck as April approaches.
With staff at the Land Registry currently threatening strike action from January 21st over the requirement to return to the office three days a week, there are also fears that delays to transfer of title could also be exacerbated.
Many conveyancing firms are working through their pipelines and prioritising cases according to mortgage expiry date, to avoid a double whammy where a buyer risks having to sort out a new mortgage deal, and also missing the stamp duty deadline.
Many lenders are also checking their pipelines and getting BDMs involved to keep cases flowing through as fast as they can.
Brokers who have not already done so are also being urged to contact those clients at risk of missing the reduced stamp duty cut-off, in order to prepare them for the worst-case scenario.
Kate Davies, executive director of the Intermediary Mortgage Lenders Association, added:
“Lenders are just as keen as brokers to ensure as many customers as possible can complete on their property transactions ahead of April 1st, but congestion at the conveyancing stage is a real issue, and some borrowers will bear the brunt of higher stamp duty as a result.
“Industrial action at the Land Registry will not help when it comes to transfer of title post-completion, particularly with those less routine cases which cannot be dealt with via an automated process.
“It is more important than ever that we keep the lines of communication open between lender, broker and borrower in the weeks ahead.”
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