Nicole Keeling
Conveyancing firms across the UK are being warned to prepare for a significant increase in client complaints due to the changes to Stamp Duty Land Tax (SDLT). The Legal Ombudsman has raised concern that property buyers could face unexpected taxation costs if their property transactions are not completed before the new SDLT thresholds take effect.
Anticipated Rise in Complaints
Lawyers are being called upon to prepare themselves for potential disputes, with the Legal Ombudsman expecting a rise in delay and communication complaints. The Ombudsman report reveals that property complaints form a high proportion of overall complaints in the law industry. Homebuyers in particular are likely to be offended if their transactions fail to complete before the new SDLT rates.
The SDLT relief limit for first-time buyers is to fall from £425,000 to £300,000, and home movers’ nil-rate band will fall from £250,000 to £125,000. This could lead to unintended additional tax for those whose deals are delayed, and this could heighten discontent.
Historical Context and Previous Trends
The Legal Ombudsman explained that previous SDLT reforms, such as the 2021 rate reduction, also led to a dramatic rise in complaints. Subsequently, delays and communications issues led to a sharp rise in consumer unhappiness. In light of yet another deadline being around the corner, conveyancers are advised to act fast and manage client expectations to prevent such repeat scenarios.
The Ombudsman has stressed the importance of proper communication by conveyancing firms, alerting their clients to the potential consequences of missing the deadline. Conveyancers must do their best to advise all the parties in a transaction of the potential consequences if completion is not achieved within the timeframe.
Preparing for the Deluge of Complaints
Conveyancers were encouraged to take a pro-active approach to prevent issues arising from the SDLT reforms. As complaints against conveyancing are prone to focus on delay, communication and failure to advise, experts warn that firms need to manage client expectations far in advance. Offering realistic timescales and keeping the client informed about progress are critical elements in ensuring dissatisfaction is averted.
The conveyancers, however, are being advised by the industry professionals that they go over their procedures and prioritize the situation where completion approaches. Firms should also ensure that they implement open systems whereby they handle every delay and provide timely notifications to clients, especially those whose transactions risk not beating the SDLT deadline.
Needs for Higher Transparency and Efficiency
With SDLT changes , firms are being encouraged to put customer satisfaction at the forefront and simplify their processes to process transactions effectively. Experts comment that though delays are not always within the conveyancer’s remit, good communication and openness regarding any problems that arise will minimize client frustration.
A leading industry expert stated, “We know that communication and delays are two of the most common grievances in conveyancing. It is to be hoped that firms recognize the threat of a spike in complaints as the SDLT deadline approaches and take action now to get ready.”
Businesses have also been advised to take a look at their client services processes and make sure that they have the resource in place to handle the likely increase in grievances. Expecting a busy period ahead, forward-thinking conveyancers will be properly placed to respond to the test presented by this change.
Further Reading
Stamp Duty Land Tax Threshold Change
FAQs
1. What is Stamp Duty Land Tax (SDLT)?
SDLT is a tax paid when purchasing property or land in England and Northern Ireland over a certain price threshold. It applies to both freehold and leasehold properties, whether buying outright or with a mortgage.
2. Who pays SDLT?
The buyer is responsible for paying SDLT when purchasing a property or land that exceeds the tax-free threshold. The seller does not pay SDLT.
3. What happens if my purchase is delayed past the SDLT deadline?
If your transaction completes after a tax rate change, you must pay SDLT at the new rates, potentially leading to higher costs. Conveyancers are advising buyers to act quickly to avoid unexpected tax bills.