With Tom Ansell, Partner
Wednesday 4 November 2020
The UK officially left the EU on 31 January and the transition period will come to fruition at the end of this year.
But what will this mean to British citizens currently living in the EU who are considering a return to the UK? How does the housing market look for those living outside of the UK and can they take advantage of the stamp duty holiday?
This webinar will cover:
- Considerations for purchasing a property in the UK
- Current stamp duty rules for those living outside of the UK
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Webinar transcript
(Please note this is auto-generated and un-edited)
0:30
Good morning, everyone. My name is Tom Ansell. and I'm a partner and head of residential conveyancing here at Shakespeare Martineau.
0:37
Welcome to today's webinar where we're going to be looking at the considerations for purchasing properties in Britain.
0:45
This webinar forms part of our series relating to Brexit. And it's really aimed at anyone that might potentially be looking to move back to Britain from Europe.
0:57
So just looking, first of all, the things that we will be covering in today's webinar, it's really designed to give a bit of an overview on the current position in the market. As well as, just letting you know about potentially more about the stamp GC holiday. And how that could be used. If you're looking to purchase the property at the moment in, in Britain. So looking at the topics that we are covering today, so we're looking at the current position in the property market.
1:31
And that will be followed by just a short, a short section, regarding topical conveyancing issues. Currently in Britain, so a brief overview of a few things that are quite topical in the market at the moment. And then, we'll be looking at sanctuary city land tax, and the position pre Cove in 19.
1:53
Because coven 19 has had an impact on Sanjay Contacts and there has been a change of fact.
2:02
And then we'll follow that up with a look at ..., GT land tax and the current position.
2:08
And then finally, looking at the London transaction tax in Wales.
2:14
So first of all, turning to the first slide then, although the next slide. sorry, being the current position in the property market.
2:24
So it's fair to say, I think that some 2020 has seen a number of changes in the proxy market in terms of sort of how it's operated. And, you know, that, the changes externally has had quite an impact on, on how things have operated.
2:44
So, the start of the year that Conveyancing market was, no, quite normal. operating as it would normally.
2:55
And then, when it got to the sort of time around about March, when we were going into the locked down period, then that sort of time had a really big impact on the on the housing market. So, obviously, when when people went into Lockdown it, made it very, very difficult for them to put the house on the market and it made it also very, very difficult for people to be able to go and view houses and make Office. So. So you know, the action in the activity, in the in the market did reduce quite significantly during that, that sort of quite lengthy period over over the sort of March two to sort of April, May period.
3:41
Now when the country was coming out of Lockdown and what we found was there was quite a lot of pent up demand.
3:50
So, the market did pick up quite significantly and then obviously, we find ourselves in the position where we are now, where the market is extremely, extremely busy, and you'll see on the slide that rightmove.
4:06
So, so, quite a big industry, body in relation to the housing market, have reported an increase in asking prices at 5.5% in the calendar year.
4:18
So, the average price, that reporting is now £323,500, which is an increase over all of £16,018 in calendar year.
4:30
So, that really shows you know, how will the housing market has bounced back and how strong it currently is.
4:38
Now, the reasons behind that, as I've just alluded to, you have the pent up demand. You know, people have spent a lot longer at home than they probably would normally. So potentially realize that you know that they wanted a bigger house or or somewhat different or a change of scenery. So, so off the back of lockdown that created quite a big pensive demand.
5:04
And, you know, first, following on from that, the introduction of some cheesy holiday. And the fact that that is only for kind of a period of time up until the end of March has meant that there has been a bit of a rush to the market to try and benefit from from the potential savings of the fact that GC holiday.
5:26
You'll also see that some lenders are reporting that mortgage mortgage applications are a 12 year high, So this is further example of, of, you know, strengthen the market payment, and the fact that there are large, large numbers of people that are currently looking to move, move, house, looking at potential predictions for the future.
5:52
So, the market is a bit uncertain at the moment. And I think it's fair to say that, you know, that, there were, there was a lot of uncertainty externally, as a, result. It. just make it very hard to predict how the market will be impacted. In the, in the medium term. Even in the short-term. So, you know, a President, the market is very strong us, as we just discussed, you know, lots of activity and certainly an increase in activity a year on year at the moment.
6:20
But, but, obviously, you know, the assumptions hold a man can then march.
6:27
So, you know, that, in terms of how that might impact the market moving forward, it is difficult to predict.
6:34
Some youth in the industry, experts are predicting price reductions in the short-term, but some also believe that there'll be an increase in prices in the next few years. So, so you know that there is no real consistency an agreement in terms of what might happen with the market. But, but, you know, as we've set a precedent is very strong, and that doesn't seem to be showing any signs of reducing the at the moment.
7:05
So, just a quick look at a couple of topical Conveyancing issues in Britain. So, the first point is regarding the home buying and selling group.
7:15
Now, the home buying and selling group is a group of industry stakeholders. So, basically, pulled together a group of people, whether it be solicitous, state agents, mortgage companies, who have been looking at ways to improve the home buying process.
7:33
And now, the home buying process is something that, you know, lots of industry stakeholders have been saying needs to be modernized and just this sort of can take a long time to go from from sort of starting and transactions completion. Now, unfortunately, due to increasing regulations and increasing demands, then, you know, over over time that that sort of timescale house has slowly increased. So so what we're sort of what the back that particular group looking at is how we can you know pull that back Swami and try and increase the speed and efficiency of the actual process.
8:14
So one thing that we're looking at is actually You know how can we provide more upfront information. So so so you know, if somebody is selling a property, actually having as much information upfront as they possibly can provide so that they have everything, you know, so that buyers pay if they put the offering on the property and then then then they can have access to the documentation.
8:39
In fact, sort of additional documentation can be that semester more quickly. Now that could be planning documents or things that potentially, as I say, you would want during the process. If that was provided earlier.
8:57
When the property is put on the market? Potentially. Or as soon as the property is sold and then that could potentially save time in the future. So, it is quite an exciting time in terms of, kind of, looking at how those things develop, because there's also a tool called things like property log books. So, if you own a property, you have a log book.
9:17
which, which, you know, again, has further information about the property, means that if anybody is looking potentially to purchase it, then they can have access to that log book, and it would have further information about the property and also, things such as reservation agreements. To mean that when you put an offer in other property, then it's a binding offer at that point. And the idea of that is that it should hopefully reduce the amount of transactions that are falling through, and potential costs that are incurred off the back of that. So, I think it is an interesting time for the market, because there is a push for change, and it'll be interesting to see how that sort of moves in the next few years.
10:00
So, the next points on the slide is leasehold issues.
10:03
So, if you were considering purchasing a lethal property and then then it's just worth mentioning that there has been recently a bit, a bit of a controversy regarding escalates and grandparents. So, escalating grandparents are circumstances where, for instance, you know, you have at least that is for 99 years, or 125 years. And there is a brand is payable, and that there are provisions within the lease to confirm that that ground rent doubles every 10 years, or 15 years or whatever the case may be. Now, as you can appreciate, if, you know, if at least starts off with the grammar of £250, and then it doubles every 10 years for, you know, telling you 125 year period, then potentially come come sort of halfway through the term, or towards the end of the term, then the grandma payable would be extremely high. And obviously, them potentially make it very difficult, Sell the property.
11:08
So there has been a crackdown in relation to this, and, you know, mortgage companies, developers, buyers, have become more aware of this type of thing.
11:21
So, so, it is something that is quite topical. So, if it is a leasehold property that you were considering purchasing, then, you know, just just make sure that the sort of fragments of a level that doesn't cause a problem potentially selling the property or potentially problems with mortgage companies of the us. Conveyances and solicitors. This would be something that we would check on your behalf and advise you on, but. But but it's just ready to mention that because, as I say, it is a it is a topical points at this moment.
11:56
Finally, on this slide, just anti money laundering considerations. So, as conveyances and solicitors, we have to ensure that we are compliant with the AML regulations. I won't go into full detail about the regulations at this point, but just to say, You know, if you are buying a property, then we would need to have sites of satisfied identification. And we would also need to see the source of any funds that you all received using to patch the property. Sorry. So, you know, if you have a certain amount of money that you are providing to purchase the property, that, we would need seeds that, have evidence of where that money was coming from.
12:37
Now, if, potentially, you are moving back to this country from a European country, than it might be the case that any sort of documents, bank details, you know, utility bills or whatever it might be, that you're providing for ID or source of funds, might need to be translated, perhaps, because, you know, we would need to see them in a format that we would be able to kind of have a look at and sort of understand if it is a case that you're looking to patch the property than than just making sure that the documents, that you provide a suitable for the needs of a conveyancer.
13:13
I've included this slide just to be able to give you a bit of an overview of the ...
13:19
rules and the position pre coded 19 because 1 of the focuses of this webinar was just to look at how the rules may have changed over the lockdown period. And whether or not, you know, if he were to move back or be looking to purchase the property in Britain, whether or not you can take advantage of the Sumptuous holiday. So, I thought it would be beneficial just to look at what the rates were previously and then look at what the rates are now. So, what you can see, Inference view all the sort of some sheets you write prior to the stamp GC Holiday being announced. So on the left-hand side you'll see that you've got stand standard ... GT land tax rates and you will see that sort of breaks it down In terms of the tax is payable on, on, on a property that you're purchasing and the potential rates that you may may incur for your sound cheesy. And on the right-hand side, this is the scenario where you're purchasing a second property.
14:24
And the rates in those scenarios in that circumstance. Sorry. You pay a 3% surcharge. So you will see from if you compare the the sort of figures on the left of the screen to the right of the screen, there is a 3% increase on on each banding.
14:43
So, just to clarify, obviously, when these, these sort of rights will apply. So on the left hand side, the standard assumptions land tax rates will apply in a scenario for instance, where you already own a property. So you're you and your family or yourself, a currently living in a property, and you sell that property and move to another property that you're intending to occupy.
15:08
Then the right, so my left hand side will apply my circumstances on the right-hand side. So, again, for example, you currently own a property that you're living in and you decide that you want to move house.
15:19
But you're going to keep your existing property and make petabytes of that. And then in that scenario, you will end with two properties and as a result, you would pay the increase in in the stamp duty when you purchase the second property. So it would mean that that your, ... would be increased in line with the rights that you can see there on the, on the right hand side.
15:43
It's also worth mentioning that, as a first time buyer, So, pre, pre the sumptuous holiday. If you are a first time buyer, then the, that was, already assumptions, hold a place on anything up to £300,000. So, if you're a first time buyer, and you were purchasing a property, that was under £300,000, that was next time sheets payable at that point.
16:13
So, now, I think it would be useful for us to look at the current position in relation, stomach Elan attacks. So, as I've already said, the government, off the back of Lockdown decided that they would introduce system treats the holiday. Now, this assumptions hold a was designed to add additional stimulus to the proxy market. Because we had gone from a situation where, you know, we have no activity at all. Everybody goes and locked down, you know, it's very, very difficult for transactions to complete to a circumstance where things opened up, albeit in a controlled manner. But that, but, you know, that was sort of activity happening, and people were able to pep proxy proxy and the markets, or, you know, look to purchase prophecies again.
17:02
So, so, the government, I think, sort of decided to do was temporary holiday. So that that added a bit more extra stimulus to that situation. So, you'll see on the screen I've confirmed the snowstorm GC currently, payable on a patch, up to £5000.
17:20
Now, the rates that you can see in front of you on the screen, that bear the current rates for the situation where you, you know, you're selling your existing property and you're moving to another property that you're planning to live in. So, so, so you know in those scenarios If that is what you're doing, then, then then you know, there are significant savings that can be currently had in relation to some GT that is payable.
17:49
So you will see from the slide that the Stone GT holiday is ... and at the end of March 2021. So time is very much taking. In this respect. We now at the beginning of November.
18:01
So, um, so we have by my reckoning just under five minutes in order to benefit from from any sort of savings. That might be possible and under the treaty holiday.
18:15
You remember, on the previous slide, we talked about the situation, where you're purchasing a second, property. So, you know, if you own a current property, your converts, and that's what parts of that and you move to a new property. Then, there will be a surcharge payable. Now, that situation is no different here, that there is a surcharge payable of 3% as asked before.
18:37
But, that would potentially be a savings to be had because now you're paying 3% on anything up to £500,000. Whereas previously, you are paying, you know, 3% on a, on a significantly reduced purchase price. So that so, so overall, this, this term sheets hold that does benefit though is that, you know, we're moving houses the family. Or maybe you know, investors that are looking to purchase additional properties. Now, you will see the rates are due to revert back to previous speakers after March 2021.
19:12
Although, there is talk in the industry of trying to see if an extension can be, can be agreed in some way. Just to make sure that, you know, the momentum that we've built in the market in the momentum that currently is, just continue. So, so, you know, nothing has been confirmed on that at the moment, but I do know that that's sort of industry stakeholders are trying to see if there is some sort of extension that can be agreed. So so I guess it is, watch this space. For that one. The next slide covers land transaction tax, which is very similar to stop chasing, but this is the regime currently in Wales. So whales do not have the sort of some juicy land tax regime that their equipment is called land transaction tax.
20:05
Now you'll see in front of you and the current rates. So this is a situation where, you know, you're looking to purchase a property in Wales, potentially.
20:15
And, you know, that, they're very similar in terms of the left-hand side is a scenario where you are, you know, moving home family or whatever the case may be.
20:27
And the right-hand side is where your, your, your looking to purchase a second property. So there is a surcharge payable in that scenario as well, but the figures and the rates are slightly different.
20:40
So my advice really would be that if you're looking to patch the property, whether it be in, you know, in UK, or, sorry, in England or in Wales, and then just make sure that you've sort of chat out the rights to to ensure that you're aware of how much And in your particular circumstances, you would end up paying fees down GC oil and transaction tax.
21:01
Now, know, we deal with some GCS conveyances and transaction tax on a regular basis. So Any queries that you might have and you know, if you wanted to try and work out how much you might pay in your particular circumstances. Then we can try and help. If it is a particular particularly complicated matter that it might be that we would say, you know, to seek specialist advice from a stamp duty expert. But, but, but, certainly, you know, if you have any queries in relation to what you might pay, then then, then that's something that we can, we can help with now.
21:38
In relation to the land transaction tax, they are also benefits from a current holiday in relation to the rights, although, this isn't is as significant as the current cool they in England.
21:50
So, the amount on the left-hand side, you'll see that there's no tax currently payable on anything up to £250,000. Previously, before the holiday, that rate was £180,000. So, so, pre, prior to the holiday, and there'd be no tax payable on anything, up to £100. There has been a slight extension that people will benefit from from, as I say, because there are some right on a slightly higher purchase price And the fourth Now, as with England, that rate is two to refer, back, come the end of March 2021. So, so, it does tie in with the with the Holiday Inn in England.
22:36
Just looking at in conclusion then. So as I said in the first point, the property market is, is strong at, the moment is very strong, and we've seen a lot of activity.
22:46
But the time is ticking to take advantage of some cheese holiday.
22:51
If you're moving back to Britain, then you can benefit from some GC holidaying in the circumstances that we've discussed.
22:58
But if you have got circumstances that, that you're unsure about that, then we are always happy to help. So you just need to contact us and we can discuss that further.
23:10
The rates will increase again from the first first of March, 2021, unless further measures are announced.
23:18
And if you are considering, as I've just said, if you are considering back, moving back to Britain in the coming months. And we'd like to discuss this further than our combined team would be only too happy to discuss this with you.
23:31
So, so, please, do not hesitate to contact us, just introducing our free legal help clients. And you see in front of you that, we have launched a Free Helpline, which will give you direct access to to our team of experts, who are able to provide you with some free legal guidance on, on any matter. The, you know, we're able to assist with, so you'll see on the screen, there is a phone number, and that, that help find is valuable from 10 AM to 12 PM between Monday and Friday.
24:06
So, finally, thank you very much for listening, and I hope you found this useful and informative. And if there is anything that you would like further information on, please do not hesitate to get in touch.
24:17
Thanks for listening this morning.
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