The Chancellor’s decision to increase stamp duty for buy-to-let and second home purchases could cause “mayhem” for conveyancers.
Last week, George Osborne revealed stamp duty rates for landlords would be 3 percentage points higher than residential purchasers from April. The details are set to be consulted on by the Government.
Broker Conveyancing warns that the conveyancing sector may have difficulty coping with the expected increase in activity as buyers look to complete before the new rates apply.
Broker Conveyancing managing director Harpal Singh says: “While I can partly understand why the Chancellor might wish to put the brakes on buy-to-let investment, the method of increasing stamp duty land tax for these purchasers will have a huge impact on the housing market as a whole and could result in a less than smooth process and, quite frankly, mayhem.
“The four-month notice period is incredibly short and it is likely to mean a very busy time for all stakeholders, particularly the conveyancing profession who are going to be pushed by all concerned to try and complete purchases before the 31 March next year.
“This will mean serious resource issues for these firms, especially when we factor in the double whammy brought about by the timing of the Easter break next year and the fact we’re not just talking about individual investment property completions but also the entire chains that they will sit within.”
Singh believes conveyancers may charge premiums to discourage an over-exposure of buy-to-let business.
He says: “It seems almost certain that buy-to-let conveyancing fees will rise in order to cope with this, the extra workload, and I wouldn’t be surprised to see some firms pulling back on their ‘no completion, no fee’ offers. It will be apparent to all advisers that ensuring their buy-to-let clients deal with specialist conveyancing firms is an absolute necessity in order to have that chance of securing a pre-1 April completion.
“Finally, we have to consider the impact on the market after this deadline is passed – we are likely to see a considerable slowdown and conveyancing firms, along with many other stakeholders, could move from feast to famine. Resource and business issues will need to be managed carefully in such an environment.”