Revealed: how long it's taking buyers to complete in 2021
With housing transactions taking longer than normal to wrap up, find out how you can improve your chances of beating the stamp duty holiday deadline.
The average time it takes for a home sale to cross the line is now just under four months – around a fortnight longer than normal.
Most buyers who agreed a sale in 2020 would have expected to complete by 31 March 2021 under usual circumstances, according to our House Price Index.
However, the average time for an agreed sale to complete has surged from 90 days to 110-115 days.
Why are sales taking longer to complete?
The housing market was one of the bright spots of the economy last year, with 47% more sales agreed in the second half of the year than the same period in 2019. And this has led to a congested sales pipeline.
The stamp duty holiday, introduced last July, has boosted buyer appetite to move home.
The temporary tax break means that nearly nine out of 10 transactions are no longer subject to stamp duty, with the average bill falling by £4,500.
It’s set to run until 31 March, and with savings of up to £15,000 on offer, many buyers are now racing to beat the deadline.
The pandemic has prompted many people to carry out a once-in-a-lifetime re-evaluation of their home too, stimulating home moves and driving a search for space.
What does this mean if you’re hoping to take advantage of the stamp duty holiday?
There is a risk that up to 70,000 sales agreed in 2020 may miss the stamp duty holiday deadline, assuming a four-month completion period, according to our House Price Index.
What is not clear is how many buyers are dependent on the stamp duty holiday.
The more buyers rely on securing the tax break, the greater the risk of a spike in sales falling through if they don’t make the deadline.
If a stamp duty holiday extension fails to materialise, buyers across some housing chains may help to fund stamp duty costs for others in the chain to safeguard completions.
However, first-time buyers will still be able to make a saving after the deadline because under standard rules, they don’t pay any stamp duty on the first £300,000 on homes worth up to £500,000.
What can you do to improve your chances of securing the stamp duty holiday saving?
It’s all about getting prepared now to reduce potential delays.
From getting your paperwork in order, to setting realistic timelines, there are always ways to keep your keep your purchase on track. Check out our top tips for a smooth property transaction.
If you're in a property chain, it’s also worth getting your head around how to manage them. Our guide on how to keep your property chain intact is a handy read.
Your conveyancer plays a key role in the buying process. Our 10-step guide shows you exactly what you’re paying for and how they can help you.
Finally, don’t let industry jargon trip you up. Look up terms you don’t understand in our property jargon buster.
Could the government extend the stamp duty holiday?
While the government will be keen to start raising tax revenues once again, the case for a short, month-long stamp duty extension is growing, to help buyers who agreed a sale in 2020 to complete.
Around 55% of sales agreed in January would complete by the end of March in a normal year – but the proportion this year is likely to be lower.
A petition calling for the stamp duty holiday to be extended has received more than 100,000 signatures, triggering a debate to be held in Parliament.
Responding on behalf of the government, financial secretary to the Treasury, Jesse Norman, said that he could not comment on tax policy outside of a fiscal event, such as a Budget.
He added: “The government will continue to listen carefully to representations from the industry and from those who are planning to buy or sell a property.”
Mortgage approvals hit 13-year high in 2020
The pandemic has fuelled a lot of home moves, buoyed by Rishi Sunak’s stamp duty holiday.
The number of mortgages given the green light soared to a 13-year high in 2020 despite successive lockdowns.
A total of 818,500 mortgages were approved for people buying a home last year, the highest level since 2007.
The increase came despite the level of pipeline loans - in other words, mortgages that have been given the go-ahead but the money has not yet been released - slumping to a record low of 9,400 in May. The housing market bounced back in the second half of the year, according to the Bank of England.
But there are signs that the boom is starting to slow, with the number of mortgages approved in December dropping slightly compared with November’s figure, as the end of the stamp duty holiday looms.
Why is this happening?
Disruption caused by the first national lockdown in March, which saw the housing market shut down temporarily, led to a sharp fall in property transactions.
But the market took off again once restrictions were lifted, unleashing pent-up demand and causing people to carry out a once-in-a-lifetime re-assessment of their housing needs.
At the same time, the stamp duty holiday prompted many people to bring forward purchases in order to benefit from the tax break.
Who does it affect?
It’s good news generally for people needing a loan to move home.
Sales were agreed on more than £300bn worth of property last year, that's 26% higher than in 2019, according to our House Price Index.
But first-time buyers struggled during 2020, as lenders withdrew their low-deposit mortgages.
What’s the background?
With a third national lockdown now in place, would-be sellers appear to have paused in listing their homes for sale, according to our House Price Index.
However, the pandemic continues to fuel buyer appetite, buoyed by a last-minute stamp duty deadline rush.
The mismatch between supply and demand could put further upward pressure on prices, but the shortage of homes on the market is likely to lead to a dip in transactions.
There have been calls for the government to extend the stamp duty holiday to provide further support to the market, but it has so far ruled out doing so.
Top three takeaways
- The number of mortgages approved soared to a 13-year high in 2020 despite successive lockdowns
- The increase came despite the level of pipeline loans slumping to a record low of 9,400 in May
- There are signs the boom is starting to slow, with mortgages approvals dropping slightly in December
MPs debate stamp duty holiday
With the stamp duty holiday due to end on 31 March, Parliament has debated an extension. Here’s what it means if you’re planning to buy or sell a home.
A petition calling for the stamp duty holiday to be extended has received more than 100,000 signatures, triggering a debate to be held in Parliament.
Responding on behalf of the government, financial secretary to the Treasury, Jesse Norman, said that he could not comment on tax policy outside of a fiscal event, such as a Budget.
He added: “The government will continue to listen carefully to representations from the industry and from those who are planning to buy or sell a property.”
Chancellor Rishi Sunak announced in July last year that homes costing up to £500,000 would be exempt from the tax.
It is estimated that nine out of 10 people purchasing a property since the announcement have not had to pay stamp duty, saving an average of £4,500 each.
But as the 31 March deadline for the end of the holiday looms, there have been industry calls for it to be extended.
Responding in December to the petition, the government said: “As the relief was to provide an immediate stimulus to the property market, the government does not plan to extend this relief.
“Stamp duty is an important source of government revenue, raising several billion pounds each year to help pay for the essential services the government provides.”
What’s the background?
The stamp duty holiday was introduced by Sunak in a bid to boost the housing market in England and Northern Ireland during the coronavirus pandemic.
Under normal circumstances, buyers pay stamp duty land tax when buying a property worth £125,000 or more, although first-time buyers only have to pay it on homes above £300,000.
The introduction of the stamp duty holiday raised the threshold at which the tax kicks in to £500,000 for all buyers, amounting to a potential saving of up to £15,000.
Can I still buy before the stamp duty holiday ends?
Yes, but you’ll need to move fast. The time it takes between agreeing a sale and completing is normally just under 100 days.
Our research shows that only 54% of sales agreed in January will complete in time, with that figure dropping to 17% in February.
From getting your paperwork lined up in advance, to smoothing out any wrinkles that may disrupt your property chain, here are our top tips to help you beat the deadline.
What happens when the stamp duty holiday ends?
Once the stamp duty holiday ends on 31 March next year, the former stamp duty rules will apply.
This means buyers can be charged between 2% and 12% tax (or up to 17% if they are a foreign investor) on their property purchase, depending on the value of the home they are buying and if they own more than one property.
“The government is committed to supporting home ownership and helping people get on and move up the housing ladder,” it said.
“When the stamp duty holiday ends, the government will maintain a stamp duty relief for first-time buyers which increases the starting threshold of residential stamp duty to £300,000 for first-time buyers that purchase a property below £500,000."
How much stamp duty will I pay after 31 March 2021?
Stamp duty is calculated as a percentage of the property you are buying. It applies to freehold and leasehold properties, whether you’re buying outright or with a mortgage.
For existing homeowners, the rates are:
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0% up to £125,000
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2% on £125,001-£250,000
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5% on £250,001-£925,000
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10% on £925,001-£1.5m
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12% on any value above £1.5m.
For example, if you buy a flat for £275,000, the stamp duty you owe would be:
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0% on the first £125,000 = £0
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2% on the next £125,000 = £2,500
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5% on the final £25,000 = £1,250
Total stamp duty = £3,750
First-time buyers after 31 March 2021
Stamp duty relief was introduced in November 2017 for first-time buyers to help people step onto the property ladder.
First-time buyers are exempt from stamp duty on properties costing up to £300,000 and pay 5% on the value of a property between £300,000 and £500,000.
A first-time buyer will pay:
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0% on the first £300,000
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5% on the remainder up to £500,000
So a first-time buyer purchasing a £275,000 flat would pay no stamp duty.
For a house costing £475,000, a first-time buyer would pay:
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0% on the first £300,000 = £0
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5% on the final £175,000 = £8,750
Total stamp duty = £8,750
However, if the purchase price is more than £500,000, first-time buyers cannot claim the relief and must pay the standard rates.
For example, a property purchased at £700,000 would result in a stamp duty bill totalling £25,000 even for a first-time buyer.
Landlords and second-home owners
For owners of more than one property, a surcharge of 3% on top of the standard stamp duty rates apply.
However, if you sell a home within three years of purchasing a second property, you can apply for a refund of that 3%.
It is also possible under some circumstances to claim multiple dwellings relief.
What about non-UK residents?
From April 2021, an additional 2% stamp duty levy will be imposed on non-UK residents who buy property in England and Northern Ireland.
It means that international buyers of second homes could pay up to 17% tax on expensive properties.
The 2% is on top of standard rates and in addition to the 3% surcharge for any investors who own property elsewhere.
What other government support is available?
During the second lockdown, the government extended its offer of mortgage payment holidays. Those who need help paying their mortgages can still request a holiday of up to six months until 31 March 2021.
To help first-time buyers get on the property ladder, the government's Help to Buy scheme offers an equity loan of up to 20% of the property value (40% in London). As long as you can raise a 5% deposit, you can then apply for a standard mortgage to pay the remaining amount.
At the Conservative party conference in October, Prime Minister Boris Johnson pledged to “turn generation rent into generation buy” and announced plans for a new scheme to give more people the chance to take out long-term fixed rate mortgages for up to 95% of their home’s value - although details have not yet been released.
What about stamp duty in Scotland and Wales?
Housing is a devolved issue in Britain so stamp duty only applies in England and Northern Ireland.
Scotland and Wales have equivalent taxes:
Scotland
From April 2015, Stamp Duty was replaced by Land and Buildings Transaction Tax (LBTT) in Scotland.
In Scotland, the LBTT rates are:
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0% up to £145,000
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2% on £145,001-£250,000
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5% on £250,001-£325,000
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10% on £325,001-£750,000
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12% on any value above £750,000
First-time buyers pay no LBTT up to £175,000.
Wales
Property owners in Wales have paid Land Transaction Tax (LTT) since April 2018.
LTT rates are:
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0% up to £180,000
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3.5% on £180,001-£250,000
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5% on £250,001-£400,000
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7.5% on £400,001-£750,000
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10% on £750,001-£1.5 million
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12% on any value above £1.5 million
In December, the Welsh government introduced an additional charge for second-home owners.
Second home-owners will now pay a 4% levy when they buy homes up to £180,000, rising to 16% for homes worth £1.6m or above.
Government makes it easier for renters with pets to secure homes
Responsible renters with well-behaved pets to secure leases more easily through Government's new tenancy agreement.
A new standard tenancy agreement introduced by the government will make it easier for tenants with pets to find rented accommodation.
Under the new Model Tenancy Agreement agreed last week, responsible tenants with well-behaved pets will be able to secure leases more easily, as consent for pets will now be the default position.
The Model Tenancy Agreement is the government’s recommended contract for landlords.
With figures showing that more than half of adults in the UK own a pet and many more are welcoming pets into their lives during the pandemic, these changes mean more landlords will cater for responsible pet owners.
What are the current rules for renting with pets?
With few private landlords currently advertising pet friendly properties (only 7%), many people with pets have struggled to find suitable homes. In some cases, this has meant they have had to give up their pets altogether.
Landlords have been able to issue a blanket ban on pets, inserting clauses into their tenancy agreements to state that renters cannot keep them.
If a pet is allowed, the landlord may also put in additional clauses to the tenancy agreement related to owning a pet, such as making sure it doesn’t foul in the garden or inside the property, not leaving it alone in the property for too long and cleaning the property thoroughly before the end of the tenancy.
Any damage to the property or extra cleaning that needs to be undertaken should be dealt with by the tenant. If it isn't, the landlord may deduct these costs from the tenant's deposit at the end of the tenancy.
Will the new Model Tenancy Agreement make it easier to rent with pets?
The new tenancy agreement isn't legally-binding, but the government hopes landlords will adopt it. Through these changes, landlords will no longer be able to issue a blanket ban on pets.
If the landlord objects to the tenant having a pet, that rejection should only be made where there is good reason, such as in smaller properties or flats where owning a pet could be impractical. It should also be given in writing, within 28 days of a written pet request from a tenant.
To ensure landlords are protected, tenants will continue to have a legal duty to repair or cover the cost of any damage to the property.
A responsible pet owner will be aware of their responsibilities in making best efforts to ensure their pet does not cause a nuisance to neighbouring households or undue damage to the property.
Landlords will be prohibited from charging a fee to a tenant who wishes to keep pets or other animals at the property. However, permission may be given on the condition that the tenant pays an additional reasonable amount towards the deposit (as long as this doesn't breach the deposit cap requirements under the Tenant Fees Act 2019).
Housing Minister Rt Hon Christopher Pincher MP said: “We are a nation of animal lovers and over the last year more people than ever before have welcomed pets into their lives and homes.
“But it can’t be right that only a tiny fraction of landlords advertise pet friendly properties and in some cases people have had to give up their beloved pets in order to find somewhere to live.
“Through the changes to the tenancy agreement we are making today, we are bringing an end to the unfair blanket ban on pets introduced by some landlords. This strikes the right balance between helping more people find a home that’s right for them and their pet while ensuring landlords’ properties are safeguarded against inappropriate or badly behaved pets.”