Stamp Duty Holiday and Business Rates Relief extensions

Following the Chancellor's budget announcements, the following comments have been prepared from SDL Property Auctions regarding the Stamp Duty Holiday and Business Rates Relief extensions. 

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Andrew Parker, Auctioneer and Managing Director, SDL Property Auctions

 Business rates relief

“The extension of business rates relief until the summer by the chancellor will be welcomed by many commercial property owners who could have been facing a hefty bill without it. The relief has served as a much-needed safety net, especially for those property owners who have been struggling to let multiple vacant units for months due to lack of demand.

“Yet there is no shortage of demand for commercial properties from investors; while tenants may be thin on the ground, investors are always keen to get their hands on big empty properties for conversion to alternate uses. It’s why more commercial property owners have been turning to auctions and for those who want to take advantage of the business rates relief extension, auctions serve as one of the only viable options to shift unwanted assets before business rates are reintroduced in the summer.

“We raised more than £180 million in property sales at auction in 2020, with property owners recognising that auction offers a faster route to sale with almost zero-risk of the sale falling through. We anticipate that we will see a flurry of activity from commercial property owners now the deadline has been extended.”

 

Stamp duty

“Now the Chancellor has confirmed the stamp duty extension, buyers and sellers will be looking to act fast to take advantage. Yet realistically even if they were to agree a sale or purchase today, they would be unlikely to complete in time for the new deadline as the average property purchase on the open market is taking more than 100 days. From now until the end of June, auctions is the only method to ensure completion without having to pay stamp duty.

“When you buy a property in an auction, you have a fixed completion date from the outset. Once the hammer falls, contracts are exchanged and the completion date is legally set. This is typically 20 working days following the date of the auction - unless otherwise specified in the legal pack. So, with accommodating weekends, purchases could be completed right up to 28 days before the new deadline.

“There is a real appetite for people buying properties at auction, driven by the speed of completion, and that demand means sellers can achieve a sale price that may be beyond their expectations. More estate agents are partnering with us to sell via auction too, in order to remove withdrawals and fall throughs. It de-risks the process for sellers as they capitalise on the momentum the stamp duty holiday has brought to the market. This is why it’s so good to see that it’s been extended.

“In our January auction, there were a number of lots which sold for more than double their guide price and a detached house in Aylestone, Leicester sold for £541,000, more than three times its guide price of £175,000+. As we prepare for our next auctions, we are expecting equally high numbers as people buy to beat the new stamp duty deadline.”