Conveyancing firms warned: Prepare for complaints spike

Law firms handling conveyancing work have been urged to act now to ward off an expected surge of complaints from angry buyers forced to shell out thousands of pounds more in stamp duty land tax.

The legal ombudsman is expecting an increase from next month if – as seems to be inevitable – clients blame their lawyers for transactions not completing before stamp duty changes come into force.

As of 1 April, the nil-rate SDLT threshold will be reduced from £250,000 to £125,000 – effectively meaning more buyers paying thousands of pounds more in tax.

Law firms report being besieged by clients desperate for transactions to go through before the deadline. The ombudsman is expecting a backlash for those who miss the crucial date.

Chief ombudsman Paul McFadden said: ‘We have previously seen that changes to stamp duty land tax can affect consumers purchasing a property if the deadline for completion is missed. Following the stamp duty holiday coming to an end in June 2021, we saw a spike in complaints about residential conveyancing, with monthly volumes increasing by over 50% - one of the highest demand increases we have seen in recent years.’

In an article published yesterday on SDLT, the ombudsman made clear it would not hold firms responsible for delays they did not cause. Even if buyers hold firms responsible for incurring an additional tax liability, they would only be able to claim back these sums through the ombudsman if the firm’s failing directly led to the extra payment.

The ombudsman said: 'Put simply, we would have to be satisfied that the purchase would have completed prior to 1 April 2025 had the service provider’s service been reasonable. This can be difficult in a conveyancing transaction, as there are a number of other parties involved – meaning that it can often be very difficult to conclude that any delays were solely the fault of the service provider.

‘Therefore, it is likely that, even where there are upheld complaints about delays and communication, remedies may be modest when compared to the additional SDLT a consumer has had to pay.’

Despite this reassurance, firms are being urged to act now to protect themselves from future complaints. Clients should be kept ‘reasonably updated’ on progress and any outside factors that may impact the transaction. Firms should ensure they have clearly advised buyers of the risk that a sale may not complete on time and keep clients fully informed about the decision to exchange.

If complaints are received after 1 April, providers are being told to address all the issues raised, and consider the tone of their response and whether it is conducive to a position resolution.