Completing BTL purchases before 1st April 2016
If you’re submitting a buy to let purchase application with a lender today, it’s probably too late to get to get case completed before the 3% stamp duty surcharge on additional residential property purchases is introduced on 1st April 2016.
As I write, our website countdown shows that there are only 37 days to go before the deadline.
That’s just over five weeks, so whilst it’s not technically impossible to get a new application completed, I would think it’s cutting it fine, particularly if the case is less than straightforward.
As you may already know, we track lenders’ turnaround times for all types of property finance so that we can give our clients a realistic estimation of when a case is likely to complete. This is particularly useful to clients for whom speed is a priority.
Whilst I’m not prepared to share information on specific lenders, I am happy to share average processing times over the last 13 months:
Vanilla buy to let
From opening a case to completion: 85 days
From mortgage offer to completion: 51 days
Residential investment (including HMOs, multi-lets and multi-units)
From opening a case to completion: 110 days
From mortgage offer to completion: 62 days
Since the stamp duty charges were announced back in December, we have been prioritising our case load. Clearly, buy to let purchase applications have to come first.
That’s not to say we are neglecting remortgages or other financial transactions but we do have the potential to save our clients thousands of pounds if we can get purchases completed by 31 March. So we are working hard to manage our clients’ expectations.
In practice, that means that out of all our case submissions across the whole gamut of property finance, approaching 500 applications are for purchases where the client will be liable for the surcharge should we not meet the deadline.
That’s one helluva lot of work for our consultants and case management team, and it’s currently all hands on deck to try to ensure we are successful in the vast majority of cases.
Most of our clients are all too aware of the impending changes and many have brought purchases forward and are doing all they can to help expedite the process.
But keeping our clients on track is the relatively easy part. They are anxious to save as much money as possible and have been relatively quick in responding to our requests for instructing and chasing solicitors, making decisions, providing documentation and signing on the bottom line.
As you would expect, we are all over the lenders, enquiring about current processing times and ensuring they have received and acted upon information supplied.
We’ve also been hot on making sure that valuations are instructed and carried out as soon as possible, so that we have time to make certain that the reports meet the clients’ requirements.
Is there a backlog with valuers? In our experience, no. Valuers are performing well and so far we haven’t seen them fall over under the pressure.
Our major concern is that solicitors will drop the ball. This hasn’t really happened yet but we are still five weeks out from April. Whilst we would expect the lenders to have prepped their own legal representatives, we are worried that clients’ solicitors are less prepared.
But what can we do? What we are doing is advising our clients to chase, chase and chase again their solicitors. In particular we are asking clients to ensure that their solicitors are not only instructing the searches in a timely manner, but are also chasing them for the results.
This is incredibly important because, as you probably know, the time it takes for a local authority to process a search is very inconsistent up and down the country. As far as anyone can tell, it’s a postcode lottery - you might get a search done in six days or six weeks.
Clearly that’s not at all helpful and according to the Property Codes Compliance Board (PCCB), the regulator for the Search Code of Practice, certain councils are delaying housing sales due to the “very poor service” they provide.
We are also asking our clients to chase their solicitors to send the Certificate of Title to the lender.
Without it no funds can be released. Remember, lenders have differing notice periods for requesting funds – and with Easter arriving at the end of March we’ll have to be even more on our toes to ensure that we don’t fall at the last hurdle.
So that’s where we and many other brokers are today. We’ll continue to chase and track progress. And of course, we’ll let you know how well we got on after 31 March.
But we might not release the info on 1 April, in case you think our figures are a joke... (Sorry).
23rd February 2016
