Stamp duty holiday must be extended to prevent ‘cliff edge’, warns industry
The property industry is calling for the current stamp duty holiday to be extended beyond next March, amid fears housing transactions could fall off a cliff edge.
There are concerns the industry does not have capacity to deal with the current surge in demand – and that many home buyers will simply pull out of transactions if it becomes apparent they will not meet the stamp duty deadline.
Property professionals representing the home moving process are urging the Government to act swiftly to release some of the pressure on the market.
Groups including the National Association of Estate Agents (NAEA) Propertymark, the Guild of Property Professionals, the Residential Property Surveyors Association and conveyancers Bold Legal Group, have sent a letter to Chancellor Rishi Sunak detailing their concerns.
The stamp duty holiday, which raised the “nil rate” band of the tax to £500,000, was applied in July and runs out on March 31, 2021. Buyers stand to save £4,500 typically, according to the Government.
Although there are still months to go before the deadline, there have already been signs that the system is under pressure from buyers looking to make stamp duty savings.
Zoopla said this week that around 140,000 more people are waiting to complete sales than this time last year.
The website has warned those who leave it to January to start their search for a home will be cutting it fine, as some sales will miss the deadline.
In the letter to the Chancellor, the property professionals warn: “We believe urgent action is required.”
They want the Government to extend the stamp duty holiday by at least six months and make an announcement before Christmas.
They also want it to work with the industry to develop a method to help smooth the end of an extended stamp duty holiday “to prevent another cliff edge”.
The letter says failure to complete transactions by March 31 “could see the breakdown of chains with consumers potentially financially unable to continue with the purchase, as they would have to find funds to pay stamp duty”.
It continues: “By acting now, the Government can release the pressure in the system to allow transactions to complete and avoid a disorderly and distressing period for movers and businesses throughout the market.
“Any extension or gradual phasing of the SDLT (stamp duty land tax) would also help mitigate sharp reductions in consumer demand.”
Stamp duty applies in England and Northern Ireland, but the temporary change has been mirrored in the property taxes that apply in Scotland and Wales.
Mark Hayward, chief executive of NAEA Propertymark, said: “The group endorsing this letter represents the breadth of the home moving process including estate agents, search agents, mortgage intermediaries, conveyancing, surveying, energy assessors and removal companies.
“The boom caused by the stamp duty holiday has been hugely beneficial for the housing market, however the stamp duty cliff edge on March 31 could cause thousands of sales to fall at the final hurdle and have a knock-on and drastic effect on the housing market, which has recovered well from the Covid slump.
“We are calling on Government to rethink these timings so pressure on the system can be released to allow transactions to complete and avoid a disorderly and distressing period for movers and businesses throughout the market.”