Should the Stamp Duty holiday be extended?
Calls for the government to extend the Stamp Duty deadline are growing louder, as many in the property and mortgage markets say lockdown will delay the purchase process, meaning many miss out on the tax break.
The stamp duty holiday can save buyers up to £15,000 if they complete on a purchase before the 31st March. But missing the deadline by just one day will mean that all but first-time buyers are forced to pay the stamp duty in full.
For some this won’t be affordable and the sale could fall through, along with the rest of the property chain.
Andrew Montlake, managing director of mortgage broker Coreco, said: “Though the property market remains technically open, there will now be considerably more logistical issues for the simple reason that a lot of people will be working from home.
“Lenders, valuers and conveyancers are already experiencing bottlenecks and delays given the sheer amount of applications going through and the administrative upheaval caused by the latest lockdown will only serve to accentuate them.
“We would not be surprised if the Treasury makes an announcement this week about extending the Stamp Duty deadline to keep demand alive and give the property industry some much needed wiggle room.”
George Franks, co-founder of London-based estate agents, Radstock Property, agreed an extension was needed: “Extending the deadline by at least another month to reflect the new national lockdown seems like the right thing to do in the current circumstances and I’m sure it’s on Rishi Sunak’s agenda.
“The property market is providing vital fuel for the economy and the Treasury will want to ensure that continues during the potentially challenging months ahead.
“Extending the Stamp Duty holiday is a way for the Government to give people something to cheer about when there’s so little to cheer about, as public sentiment and the property market are closely related.”
One idea is that instead of a straight extension, the tax holiday should be phased out gradually to avoid a collapse in housing market confidence, alongside the expected slowing of the property market in 2021.
Rightmove data shows a logjam of 650,000 properties changing hands, many of which will not complete before the end of the stamp duty holiday.
David Hannah, founder and principal consultant of Cornerstone Tax, said: “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.
“Especially now that the country is being plunged back into another full lockdown, more must be done to help people get on the property ladder and give the market some security in what will be a very turbulent few months.”