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There’s a Covid clause for conveyancing contracts

With the stamp duty holiday coming to an end on 31 March 2021, and the UK in another national lockdown, those buying or selling homes are rightly feeling antsy about the next stages of the sale.

After all, coronavirus has delayed a great many things last year.

But when it comes to property sales, there’s the possibility of a financial penalty worth perhaps tens of thousands of pounds if things are delayed.

Under normal conditions, when there is a lag between the date contracts are exchanged and completion (move in date), the buyer would put down a deposit that’s equivalent to 10% of the sale price and pay the rest on completion. You can also exchange contracts and complete on the same day, in which case the balance is due in one whack.

In the former case, if the buyer is unable to complete on the agreed date, a Notice to Complete can be served, after which the seller can apply to keep the deposit if the sale doesn’t go through.

For buyers, that’s obviously a big financial risk and some have lost years of savings because of this.

But because of the unprecedented effects of coronavirus, buyers and sellers can actually add a special Covid-19 clause to their contract before they exchange.

It means that should there be a delay, the completion date can be pushed back or the sale cancelled altogether without penalties on either side.

What it means for you...

If you’re currently in the process of buying a home, it’s certainly something to think about - it won’t be for everyone, and could make the process more expensive and time consuming, but it could offer some buyers more protection.

The clause would only apply in certain circumstances, and the delay must be triggered by the pandemic. Examples could include new government restrictions, if one party is hospitalised, a mortgage offer has been withdrawn after exchange or if the buyer or seller experiences a significant change in their financial position.

Obviously both parties will have to agree to the clause beforehand, and there may still be other associated costs if the sale doesn’t go through, such as the use of a surveyor or a solicitor. And to complicate things, the clause may need to be added all the way up the chain if there is one.

The Law Society has a handy guide (see the guidance for clients) that explains the ins and outs a bit more.

The next step would be to speak to your conveyancing solicitor - they would be able to advise whether it’s suitable for your particular circumstances and negotiate the terms.

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UK cryptoasset firms must now be FCA registered

If you hold cryptoassets, now is the time to check whether the company you’re holding it with is registered with the Financial Conduct Authority (FCA) - under updated regulations, all UK cryptoasset firms must now be registered to legally operate in this country.

The firms had to submit an application to register with the FCA by 15 December 2020, and if they missed the deadline, they must stop trading within the UK and return customers’ money by 10 January 2021. Basically, anyone still operating in the UK and not on the FCA register is now breaking the law.

This is part of the FCA’s new powers to tackle money laundering and terrorist financing in this still largely unregulated industry.

While firms must now register with the FCA, it doesn’t actually give consumers any additional protection.

The Authority considers cryptoassets to be “very high risk, speculative investments” where investors should be prepared to lose all of their money, as such investments are unlikely to benefit from safety nets such as the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS).

But in light of the new regulations, the FCA suggests investors do three things:

Step 1: Consumers should check if the firm they’re using is on the Financial Services Register or list of firms with Temporary Registration (Note: appearing on the Temporary Registration Register does not mean that the FCA has assessed them as fit and proper, nor that the FCA has determined their application for the purposes of the Money Laundering Regulations).
Step 2: If they’re not, consumers should ask the firm whether they are entitled to carry on business without being registered with the FCA.
Step 3: If they’re not, the FCA suggests that consumers should withdraw their cryptoassets and/or money. This is because the firm is operating illegally if it has not ceased trading by 9 January 2021.

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Flat fees on small pension pots will soon be banned

Automatic enrolment has meant that many of us now have pensions that we may not otherwise have bothered with until much later in life.

But for those on lower salaries or who change jobs a lot, it could mean tiny pension pots scattered all over the place.

In some cases, the management and admin fees can eat into the amount of capital you hold in those pension pots as they’re higher than the value of growth.

But there is good news - the government will soon be banning flat fees on pension pots that are worth £100 or less.

This is the amount that research suggests will disappear over a 22-year-old’s working life, assuming they don’t put any more money in.

DWP @DWP

Minister for Pensions @GuyOpperman: "Protecting savers and giving them value for their money is my priority. No-one should find their hard-earned pension savings eaten away by charges and this new £100 limit will make a massive difference."

Announcing the news, Guy Opperman, minister for pensions, said: “Removing flat fees on pension pots worth less than £100 will boost the pensions of hundreds of thousands of people and help them enjoy the retirement they deserve.

“We will also be introducing pensions dashboards, which will make it easier for savers to track these smaller pension pots and ensure they’re getting the most from their savings.”

Of course, the pension will still be subject to, for example, management fees, which are generally a percentage of the value of the pot. In effect, the pot could still dwindle, but at a slower rate.

It’s one of the reasons why you might want to merge your pension pots.

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This week’s key numbers

UK’s GDP fell by 2.6% in November 2020 due to the second lockdown, which is of course no surprise. The dip is much smaller compared to lockdown one, but of course not as many industries were affected the second time around.

But what will be really interesting will be how December’s GDP shapes up - will it have gone up because of Christmas shopping, or down because of tier 4 restrictions? One thing is for sure, we’ll see another dip when January’s GDP figures are released.

The FTSE100 has recorded its worst week since late October - there are increasing economic concerns following tougher lockdown restrictions around the world, triggered by new variants of coronavirus.

Although if you’re an investor, depending on where your money is held, the value of your investments may well have gone up significantly recently. Whether that continues will likely depend on how fast vaccines can be rolled out vs how quickly new variants of coronavirus spread.

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Finally...

Next week is an exciting and scary time for me - it’s my last week at The Independent. My stint, a maternity leave cover contract, is coming to an end and it’s onto pastures anew.

It has been an incredibly challenging 11 months trying to navigate increasingly convoluted travel restrictions in an ever-changing world for work, and then living it at the same time. So yes, I am very much looking forward to a couple of lazy days with no plans (which sounds a bit like my weekends right now, to be honest).

But it is also an exciting and scary time because, while I have some freelance work lined up, I won’t have the safety cushion of a staff job for the first time in years.

Career-wise, I think I managed to achieve a lot the last time I was freelance - I got some great bylines and wrote a cookbook, for example. But now that I have a mortgage to consider, in the middle of what looks like a never-ending pandemic, things are obviously a little bit different.

Anyway, all that is to say, wish me luck.

PS, don’t forget, the deadline for tax returns is coming up on 31 January. This year though, HMRC will accept Covid-19 as a reasonable excuse for missing the filing date - you will have to explain how you’re affected to avoid paying the fine.

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