Industry chiefs warn “holiday” needs to be extended or economy could take £4bn hit
Property industry leaders are pressuring the Government to extend the Stamp Duty holiday because increased pressure on service providers is causing huge delays for buyers and sellers.
A joint letter – sent to the Chancellor, Rishi Sunak, and signed by 14 trade bodies – pleads for an extension to the March 31 deadline as conveyancing, surveying, mortgage and search services have been overwhelmed by demand.
And, according to property market analysts Twentyci, it is taking an average of five months for a sale to go from agreement to completion. This means that sales agreed now would not go through before the end of the tax break, potentially costing the economy £4billion.
Essentially, it means the home-buying process should not start any later than this weekend.
And added to that, the Index West Midlands Property Information body this week said an unprecedented rise in council property searches meant a high number of homebuyers would miss out on saving as much as £15,000 unless the scheme was extended.
One of the letter’s signatories, Mark Hayward, the 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.”
He fears a “Stamp Duty cliff edge” which could lead to a sharp decline in property sales “at the final hurdle” and added: “We are calling on the 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.”
The letter states: “In May 2020, the UK housing market emerged from lockdown re-energised by certainty that the UK would be leaving the European Union and pent-up demand following two months of lockdown. There was consumer demand to move to different types of property in addition to the delayed chains in the pipeline in March. This demand was bolstered by the temporary reduction of Stamp Duty Land Tax (SDLT) and the termination of the existing Help to Buy scheme – both with deadlines of 31 March 2021. Despite two months of lockdown, property transaction levels have now accelerated and overall 2020 volumes are expected to end the year higher than last year.
“We believe urgent action is required, and are calling on the Government to:
1 Announce an extension of the Stamp Duty Holiday of at least six months before Christmas in order to reduce the risk to the consumer.
2 Work with the industry to develop a method to help smooth the end of an extended Stamp Duty Holiday to prevent another cliff edge.
“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 would also help mitigate sharp reductions in consumer demand. More widely, a buoyant housing market drives consumer confidence in the wider economy whereas constrictions on lending and falling house prices lead to reduced consumer confidence and a material reduction in economic activity.”
David Hannah, the founder and principal consultant of Cornerstone Tax, said: “It is critical that the Government reviews this Stamp Duty holiday, and either announces an extension or amends the tax payment date, so that homebuyers can still take advantage of the holiday, even if they cannot complete by 31 March next year.
“The most preferable option would be a phasing out of the holiday, to avoid those who are currently in the process of purchasing their properties, essentially being thrown off a cliff-edge.”
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