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Agents should get ready for the stamp duty holiday end date in September well in advance to ensure that fall-throughs and chain breakdowns are kept to a minimum.

That’s according to HBB Solutions, which argues that agents need a plan B in case things start to go wrong as the end of the stamp duty holiday nears and the expected market dip arrives after it ceases.

Not all transactions will complete in time

National Landlord Investment Show – MPU

While the first stage of the stamp duty holiday ended on June 30, lowering the nil rate threshold to £250,000, there are still many buyers who are looking to take advantage of the stamp duty savings before October 1 arrives – when the nil rate threshold will return to pre-Covid levels of £125,000.

However, there are still record numbers of transactions in the pipeline, with delays in the conveyancing process common and slower than normal timeframes for completion in many cases.

According to a recent article in The Times, nearly 120,000 property buyers were likely to have missed the first stamp duty holiday deadline, with one in five of these purchases potentially collapsing because of a lack of funds.

HBB argues that, while it’s certainly the case that the end of the holiday has been baked in somewhat, there is still likely to be a spike in fall-throughs as the end date nears and immediately after it.

“The end of September is now not very far off at all, and it seems inevitable that many people going through the process now will miss out on stamp duty savings by not completing in time before the holiday ends once and for all,” Chris Hodgkinson, managing director of HBB Solutions, says.

“There is the continuing impact of Covid self-isolation to factor in, too, in what is being called the pingdemic, which could hamper the ability of firms to progress sales.”

“We’ve certainly seen there are still delays with surveys, searches and conveyancing due to staff shortages and high demand.”

He adds: “Although many will have factored in the possibility of not receiving those savings, even if their transaction has been in the pipeline for some time, there may be others relying on the savings who will feel the need to withdraw or rethink if they can’t secure them in time.”

Despite the first stage of the stamp duty holiday ending and the phasing out period being entered, the market is showing no signs of slowing down.

Unsurprisingly, June saw record high levels of residential transactions, as people sought to beat the first deadline. In total, according to the latest figures from HMRC, the number of UK residential transactions reached 213,120 in June, some 216.1% higher than June 2020 (a month before the stamp duty holiday was introduced) and 108.5% higher than May 2021.

It was also the highest monthly UK total since the introduction of HMRC’s statistics in April 2005.

Looking at things on a seasonally adjusted basis, transactions totalled 198,240 in June 2021, 219.1% higher than June 2020 and 74.1% higher than May 2021.

“2021 now seems certain to be the busiest year for home sales since before the 2008 financial crisis, beating 2016’s figure of 1.23 million — there have already been well over 800,000 sales in the first half of the year,” Mike Scott, chief analyst at estate agency Yopa, said of the findings.

This is backed up by Zoopla’s latest forecasts, which predicts that 1.5 million homes will be sold in 2021, a 14-year high and the largest number since before the global financial crisis.

“Zoopla is predicting 1.52 million house sales this calendar year, a massive rise of 45% compared to 2020, and the first time the figure has surpassed 1.3 million since the global financial crisis of 2007-09,” Hodgkinson commented.

“In total, this would mean the value of sales reaching a barely comprehensible £461 billion, some 68% above the level seen before the Covid-19 crisis hit in 2019. In other words, the market is booming and is expected to continue booming for the rest of the year.”

However, Hodgkinson argues that agents can’t get complacent – and that having a safety net to fall back on if things start to go wrong is all-important in a particularly busy and chaotic market.

“The busier a market is, the more scope there is for things to go awry in terms of chains breaking down,” he said.

“Even if only a small number of the record number of transactions currently in the pipeline starts to falter, that’s still a not insignificant number of chains breaking down and buyers and sellers left frustrated.”

Alternative solutions needed

Even in a normal market, the fall-through rate is alarmingly high for UK property transactions. And this is supercharged by the current market boom, HBB says.

It is likely there will be more fall-throughs as October 1 nears, too, even if the dreaded cliff-edge is unlikely to materialise as the end date is already firmly baked in.

“As a result, agents need to consider alternative solutions to offer buyers and sellers a way out of broken chains and fall-throughs, and the frustration, misery and cost this causes,” Hodgkinson explains.

“Fall-throughs shouldn’t just be accepted as the norm – there are alternatives out there from chain repair experts to keep the market ticking over nicely and fewer disappointed buyers, sellers and agents.”

He says it’s in an agent’s interests, as much as anyone’s, to avoid chain issues and fall-throughs, as agents only get paid their commission upon completion in the majority of cases.

“By preparing now, a few months ahead of the deadline, agents can be in the best possible position to offer solutions if the worst comes to the worst with a portion of transactions,” Hodgkinson concludes.

“There is likely to be more of a regional element to the stamp duty rush before the end of the September, given the lower cap at play. While London and the South East has already started to see transactions ease off a little, even as prices remain high due to shortage of supply, the second stamp duty surge could be more concentrated in the Midlands, the North East, the North West and Wales, where properties are generally more affordable.”

“Agents in these areas in particular may want to get their ducks in a row now before it’s too late.”

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