The housing market remains open but is subject to:
Substantial delays – and risks for both Covid – and stamp duty issues.
This practice note is to ensure all our clients understand their:
- Risks of delay and potential losses. re client expectations
- Time to completion
- Stamp duty payment obligations and deadline for not paying stamp duty
- Covid related risks and losses.
All conveyancers in England have been told to update client expectations due to the number of issues impacting normal conveyancing, its workflows, speed, risks in actually moving, and other factors which can lead to misunderstandings, frustrations and complaints between client, estate agent and conveyancers.
Time to complete: The conveyancing Bold Legal Group has estimated the national average for a conveyancing transaction is now 20 weeks (5 months); longer due to the risks below.
Ensure you PLAN for these TWO RISKS (below) and to COMPLETE in 5 MONTHS or more (as above).
Risk 1: Your stamp duty deadline is 1st November, at the latest, to have your offer accepted by the seller, and for you to instruct your lawyer to start your legal work. Beyond that date you will unlikely complete by the required stamp duty holiday deadline (31st March 2021) to be eligible for exemption to SDLT tax on properties up to £500,000. This means you will have to pay your stamp duty tax in full.
Warning 1: You must make contingency plans for any additional funding to cover your full SDLT payment, if the deadline of the 31st March is missed.
Warning 2: Plan for the stress and frustrations in the weeks running into March where many deadlines will be out of our hands as they will be subject to third party bodies and their speed or lack of it. As such a lot of things will remain outside our control;
Risk 2: Covid-19 guidance, delays and risks on exchange and completion
(see the rest of the page below)
Index for Covid related risks:
As the UK”s No. 1 awarded conveyancers, AVRillo is affiliated with all professional and membership bodies governing conveyancing in the UK which has allowed us to help shape guidance for the conveyancing industry during Covid by producing a joint guide (below 1.(i)) to help sellers and buyers move during Covid. For your peace of mind we have put together this guide page so you know what you need to do, not do, and how to get an update during Covid. For your peace of mind AVRillo are regulated by The Council of Licenced Conveyancers; our lawyers regulated by combination of: The CLC, The Law Society, ILEX, The Society of Licenced Conveyancers and members of The Conveyancing Association and The Bold Conveyancing Group.
1). Overriding principles and guidance for clients to follow during Covid-19
Estate agents, conveyancers, lenders, search companies, and removal companies are allowed to operate during lockdown, from 5th November 2020, but subject to guidelines and exceptions detailed in the following guides which all clients must read prior to instructing their conveyancer to exchange contracts with them. We will also send clients a pre-exchange Covid explanation and sign off, but in any event, they must read these guides below:
i). The Council of Licenced Conveyancers joint guide (of which AVRillo is a member): https://www.conveyancingassociation.org.uk/conveyancing-market-stakeholders-produce-industry-guidance-for-firms-during-coronavirus-crisis/
ii). The Law Society Client Guidance (6.1 below) Sector specific guidance for Clients
iii). The Government advice guide on home moving during the Covid-19 outbreak to those moving in England: https://www.gov.uk/guidance/government-advice-on-home-moving-during-the-coronavirus-covid-19-outbreak
iv). The Government’s Statutory Instrument re: Public Health Protection (Coronavirus, Restrictions) (England) (No. 4) Regulations 2020 , re your overriding principle to follow social distancing and other government requirements under Public Health England and other Government statutory instrument https://www.legislation.gov.uk/uksi/2020/1200/pdfs/uksi_20201200_en.pdf
2). Don’t underestimate the inevitable Covid related delays to estate agents, lenders, search companies, surveyors, removals and conveyancers
These can add weeks (if not months) onto your transaction due to the backlog and logistics faced by legal firms and third parties as some parts of the industry are coming to a virtual standstill. Allow for third party delays, from, for example:
- Plan potentially for your case to take 5 months, or longer, and plan for consequences of the case taking longer. For example: For buyers, make contingencies to find funds to pay for your full SDLT tax, in case you are unable to complete by the 31st March, stamp duty holiday deadline. It’s serious, if you don’t have the funds, you will fail to complete, thereby losing your 10% deposit of the entire purchase price. Generally for buyers and sellers, take into account potential risk of you or other parties in the chain being affected by Covid, from economics such as redundancy to covid-19 related illness or isolation issues, to simple delays on third parties such as lawyers, lenders, removal companies in the chain.
- Lenders are taking far longer to deal with calls, emails, and letters (some lenders have actually closed their help lines altogether). Anyone with a mortgage will likely suffer delays here not only in obtaining a redemption figure on a sale, but in receiving their mortgage offer on a purchase, or the lender replying to any reports they want notified to them. It’s not a question of putting pressure on your lawyers to call your lender, firstly the Council of Mortgage Lender asks for lawyers to chase in writing, secondly, some lenders have closed their lines to lawyers. Think out of the box, some clients are chasing the lender themselves as the direct client of the lender, paying their fees, and thereby getting much faster replies.
- Search companies are being delayed by weeks, if not months, because of their limited access, especially to local authorities to obtain searches (many authorities are working with limited staff etc). Estimated return dates are also expected to increase, some potentially taking twice as long.
- Surveys and valuations. These are taking weeks longer to organise due to Covid. Allow more time for surveyors to organise appointments not only because of their increased volume of work, but also due to Covid issues. Remember also, they need certain time to visit, and write up their reports.
- Delays in leasehold transactions from Landlords or Management Companies sending leaeshold information packs (needed to work out apportionment of service charges to complete).
- Delays for those with probate or matrimonial issues, with delays not only in the Court system, but also at the Probate Registry.
- Delays at the HMLR Land Registry in dealing with requests and applications.
- Covid-19 risk of delays and failed completions due to potential change in government restrictions or buyers, sellers (their families or those they care for) and other third parties, being affected by hospitalisation, self-isolation, quarantine etc.. Third parties can include UK financial system failing to deliver the purchase or mortgage money for completion, the buyer’s mortgage offer being withdrawn or a change in financial position might change in one of the parties in the chain of transactions on which your move is dependent or even the removal companies not being available.
- Conveyancers are slow, getting slower. Generally UK conveyancing is grinding to a halt due to Covid and stamp duty deadline pressures and calls, emails and correspondence from stressed clients and agents. Remember the more interruptions to the lawyer, the less time they have to be proactive on your case. Our best advice is to find a conveyancer you trust to be proactive, and let them to get on with it. If you don’t trust them, ensure you let them know, regain that trust, then allow them to get on with the legal side.
- What is AVRillo doing? In an industry where other firms are laying lawyers off, we have taken on 20 more conveyancing experts to push deals. These will be added to your teams, but bear with us as we whilst we will push all third parties, we don’t have no control over their speed. Trust us, if you don’t hear from us within 48 hours, our fast track speed (not average 1 to 2 weeks with other lawyers), it means we are waiting or chasing. Use these tools and guidelines (section 3 below) to help AVRillo help you move faster, reduce delays and reduce your risk of financial loss.
3). Tools clients can use to get faster updates, reduce delays and reduce risk of financial loss.
3.1). Wait for our automatic updates. We have spent millions of pounds to send these at all relevant stages. They have been specifically coded so if we take a relevant step you will know about it immediately (by a mixture of SMS, email and live dashboard record). It means that if you do not hear from us, you can assume we are waiting for an update from another party.
3.2). Log into our live 24/7 case portal for specific updates. We have just released our Covid-19 ready, revolutionary 24/7 online portal for you to get a live update at any time of the day. You can check your milestones, steps taken, steps remaining and even your history screen of relevant correspondence. This will save you having to call your estate agent or lawyer for an update. Simply login using the password emailed to you at the start of your case. If the update is not there it means it means we are working on your case or waiting on a response from a third party.
3.3). Live chat box for you to ask legal questions. Simply use our new legal live chat bot (bottom right-hand corner of this page) to save you time. Ask most common questions without having to waste time having to communicate with your lawyer. Your questions can range from what are additional enquiries, how stamp duty, exchange, and completion work etc.
3.4). Watch our guide videos. Visit our website https://avrillo.co.uk to view video explanations of the common steps, issues or commonly asked questions.
3.5). Book a call surgery appointment. For an emergency discussion visit https://avrillo.co.uk/legal-surgery/ to go directly to your lawyer’s calendar, choose your date, time and add your question in advance so you can then speak to your legal team directly.
3.6. We have expanded our legal and support team. This means your lawyer will have other experts in their team to assist you when so where many firms are making redundancies or putting lawyers on furlough.
4). Emergency Exchange or Completion Issues. If you are panicking and would rather get an urgent email book in (and not wait the normal Law Society and CLC guidance on reasonable times allowed to conveyancers to reply (48 hours plus), please email our emergency team at firstname.lastname@example.org.
5). Case updates generally
5.1 Updates generally
Exchange or completing in the next few weeks? These are being actively worked on as you read this. We will update you if we encounter issues or delays from third parties.
Early stages in your case? Rest assured we have a very smooth and proactive operation which means we always chase and push your case, and we will update at all relevant stages.
5.2 What are the most common updates clients ask for, and how to get these faster?
5.2.(i). On your Purchase
Early stages: We will review papers once received from the seller’s lawyers. Leave this with us, it can take a few weeks, but we are fast.
Additional enquiries: This is the longest part of conveyancing. It can take months. Rest assured we do chase, and will notify as we get updates. If you do not hear from us, it means these are still being dealt with by the seller, their lawyers, or other third parties.
Searches. Please make immediate payment online https://avrillo.co.uk/payment/ to order your searches as local authorities are currently delaying by weeks, if not by months.
Mortgage offers: Clients will be sent their mortgage offer directly. Once we receive our version from the lender, we will notify all parties.
Payments & AVR Bank details for deposits or completions, please call 0208 370 3877 and press Option 1.
5.2.(ii). On your Sale
Issue of contracts: We issue contracts immediately on the day that the file is opened. All parties are also notified and advised, so there will be no delay.
Additional enquiries: When received from the buyer solicitors, they will be processed and sent to the client.
Management packs: We ask clients for details of their relevant management company or landlord. After we have this information, we ask our client to pay their landlord and, or management company directly. If our client still wishes to pay us, so we can then pay their landlord or management company, then please pay online at https://avrillo.co.uk/payment/.
6). Covid Guidelines for Clients
Both the Government and professional guidance notes apply to owner-occupied homes and to second hand, rather than new-build, homes. These are set out in section 1 above (for you to read prior asking us to exchange). Also we set out two specific guides, 6.1, mandatory reading for clients prior to instructing us to exchange, and 6.2 optional to read as it refers to your conveyancer, not you as the client.
6.1). Client Covid Guidance from the Law Society
Please read your Sector specific guidance for Clients. It is mandatory reading for Clients including the three choice of options you have on how to exchange contracts, and their risks, which choice you will instruct your conveyancer on, just prior to exchange. Below is a summary only as you must read the full guide.
Government advice: The most recent advice from the government includes (read link below) includes: https://www.gov.uk/guidance/government-advice-on-home-moving-during-the-coronavirus-covid-19-outbreak
“Once you have agreed to move home by exchanging contracts or signing a tenancy agreement, you have entered into a legal agreement to move…”
Exchange of contracts: “The buyer and seller each sign an identical contract. When the property lawyer acting for each of them exchanges the two parts of the contract, a completion date is fixed and the transaction becomes binding on both parties.”
Completion: “The date that is agreed between the parties when contracts are exchanged when the seller moves out of the property and the buyer moves in. For a variety of reasons, there are occasions when one of other of the parties is unable to complete the transaction on the completion date and, very occasionally, the transaction is never completed. In these circumstances, the party who fails to complete suffers a financial penalty which can be very substantial, especially if the transaction is one of a chain of transactions.”
The impact of coronavirus (COVID-19). During the lockdown period, a number of people who had exchanged contracts were unable to complete on the agreed date for a variety of reasons. The fact that COVID-19 is likely to be a problem for some time to come means that there are new risks to buying or selling a property. New risks
The new risks which have arisen are:
- ” you or your buyer/seller or someone in your or their household may be unable to move out, either through illness or the need to self-isolate
- you or your buyer/seller may be in hospital
- there may be a further lockdown which prevents you or your buyer/seller from moving
- moving might be in breach of government regulations or contrary to government guidance • there may be difficulties in obtaining removal services
- your or your buyer’s mortgage offer might be withdrawn or the financial position might change of one of the parties
- the UK financial system fails to deliver the purchase or mortgage money
- any of these problems might occur to another party in the chain of transactions on which your move is dependent.”
There may be other risks arising from COVID-19 of which we are not currently aware.
“If the number of COVID-19 cases continues to fall, these risks will be less prevalent but will continue to exist for some time.
First choice: You enter into a standard contract in the same way as you would have done prior to COVID19.
Risk: You, your buyer/seller or someone in the same chain of transactions as you is unable to complete on the date agreed for completion.
If it’s you, you will suffer a significant financial penalty. The longer the chain of transactions, the greater the loss.
Even if it’s not your fault, you will not be able to move, will suffer considerable inconvenience and possibly financial loss as well.
To minimise the risk, the period between exchange of contracts and completion should be as short as reasonably possible.
Second choice: Exchange of contracts and completion take place on the same day.
Risk: You will have to arrange to be ready to move on the date agreed by all parties in the chain for completion, including booking removers but will not know for certain until the day whether completion will take place. If it does not, you may lose any deposit you have had to pay to your removers. You will not be entitled to compensation from the party who is not ready to move, but equally if it’s you, you will have no liability to any other party in the chain.
Third choice: This is designed to achieve as far as possible the flexibility contained in the government advice. You ask your property lawyer to add a clause to the contract which specifies certain situations (which may reflect some or all of the new risks) in which completion can be delayed if one of the stated situations arises after exchange of contracts. It will be necessary for all contracts in the chain of transactions to contain similar provisions. If as a result of one of the new risks you’re unable to proceed with the transaction, you will not have any financial liability to the other parties in the chain.
Risk: Although contracts have been exchanged, it will still be a possibility that completion will not take place on the agreed completion date if you, your buyer/seller or someone in the chain is affected by one of the new risks. It’s also possible that the chain could collapse if one party is not able to proceed as a result of one of the new risks. If that occurs, you may not be entitled to any compensation from the defaulting party.”
6.2 Specific Joint Guidance for Conveyancers
(Issued by Law Society, Optional read for clients: Sector-specific guidance for conveyancers (PDF 338 KB)
From the whole team here, we would like to thank you for your patience and continue to be alert and stay safe.
For further industry guidance from the Conveyancing Association, please click here.