Is extending the Stamp Duty holiday merely delaying the inevitable?

By Laura Sears

As the country continues to pore over the government’s roadmap out of lockdown, the property market has already seen a kickstart. According to widespread reports, the Chancellor of the Exchequer, Rishi Sunak, is set to extend the current Stamp Duty holiday until the end of June in his Budget announcement this week.

The break was introduced last summer to reinvigorate the property market after its temporary closure due to the pandemic, and was scheduled to end on March 31^st 2021. It meant that any property purchased in England or Northern Ireland under £500,000 was not due any Stamp Duty payable, a saving of up to £15,000.

Droves of would-be house buyers – and their solicitors and lenders - are breathing a sigh of relief that the race to complete before the end of this month is now alleviated, with some 100,000 people originally set to miss out now on course to benefit from the saving.

Many believe the holiday has been vital to supporting the property industry during a difficult last few months, and have welcomed the rumoured extension: a poll by MoneySuperMarket shows that 74% of people in the UK support the extension, which has reportedly saved house buyers £5 billion.

Figures from Propertymark show that January 2020 was a record month for sales agreed, the highest since 2007, but the approaching end to the holiday is seeing sales collapse in record numbers as buyers realise they likely won’t complete in time. Earlier research found nearly two thirds – 63% – of prospective buyers were in the market due to the scheme, while 60% said they would change their buying plans if the scheme was not extended.

There are calls across the industry for the Chancellor to go further, with a tapering beyond its proposed June cut off, rather than the cliff-edge it currently is.

Matt Coulson, director of Heron Financial, suggests that by simply extending the deadline as it stands, Mr Sunak could be just “kick[ing] the can down the road and create the same problem with a different end date, and invite some optimistic people to start the process from scratch, creating a never-ending surge.”

Whether the extension will only apply to those transactions already in the pipeline, or to new transactions as well, remains to be seen. If the latter, surely the problem merely has a plaster stuck on rather than being properly treated.

The fairest solution, and the one most requested by property professionals, seems to be this suggested tapering, limiting the extension for people already a certain way into their transaction, who might lose out because of something out of their control. Conveyancers and local authorities are already at capacity, so adding new deals to the list will only mean purchases that struggle to get through in two months’ time – the issue is merely postponed.

This latest announcement, along with the confidence brought about by the vaccine and Boris’ dates out of the lockdown, should help keep the momentum going, and while whenever they decide to end the Stamp Duty holiday we will naturally see a slow down on the approach, in all likelihood it will pick up pace again once past – after all, we all need homes and the government’s drive to get us all into home ownership isn’t dwindling any time soon.