With the potent combination of a stimulus-led Stamp Duty Land Tax holiday and significant pent-up demand after two major lockdowns, activity in the UK property market this year has increased to levels not previously seen since 2016. Add this to historically low borrowing rates and it is clear why 2021 has been one of the busiest on record.
With such an increase in transaction levels, and the need to meet tight deadlines, the speed with which a transaction is conducted takes on far greater significance. With many forecasters predicting continued growth moving into Spring 2022, the level of activity sees no signs of abating.
So how can buyers and other property professionals ensure that tight deadlines are met and transactions completed in the most expedient timeframe possible? As with so many areas of life, the key lies in careful preparation and the old adage “failing to prepare is preparing to fail” certainly rings true here.
Devil in the detail
Starting at the outset, it is vital to ensure that the terms agreed between the parties are fully comprehensive and not open to interpretation. A traditional memorandum of sale is not heavy on detail and will occasionally miss out key terms that may have been part of the deal; this will only become a stumbling block further down the line.
Solicitors acting for a seller will often think they have the easier role, but they should be strongly encouraged to undertake a thorough review of the contract pack they are issuing, as if they were acting for a buyer. In doing so, any obvious defects or omissions can be dealt with at the earliest opportunity, saving both time and money.
Benefits of a buying agent
Buyers looking for an advantage in competitive markets should consider instructing a buying agent to source a property and guide them through the transaction process, particularly one who knows the area in question and has good contacts with the local selling agents. This can save a lot of time and open up properties that have not yet come on the market.
Where a purchaser wishes to use mortgage finance, this is likely to slow a transaction down, though not always to the extent imagined. A purchaser can mitigate any delay by engaging with their mortgage broker or bank before any offer is made. While this may sound obvious to many, it remains a constant source of surprise how often this process is left to the last minute.
Tick the tax box
The past decade has seen significant changes to the tax position relating to residential property, particularly for purchasers and those owning within a corporate structure. Obtaining early advice on any potential tax exposure, from a lawyer or other professional, will dramatically reduce the risk of a transaction falling through at a later stage due to a buyer discovering they are on the hook for previously unknown liabilities.
The success of any transaction will ultimately come down to teamwork, and ensuring high quality professional advisers are appointed at the earliest opportunity will provide the best chance of meeting a tight deadline.
By Piers King, Associate, Farrer & Co LLP