This week’s budget has been the subject of many rumours following The Building Societies Association calling last week for the chancellor to bring an end to the current stamp duty holiday with a tapered end rather than a sudden cut off which could leave many home buyers missing out on the benefits of the stamp duty holidays through delays to transactions caused by a third lockdown.
The pause in Stamp Duty was introduced last July in a successful bid to strengthen the housing market. Consumer confidence was boosted, and buyers have been benefitting from tax relief on properties worth up to £500,000 following the near collapse of the market after the onset of the Covid-19 pandemic.
Similar to those seeking assistance from the Help-To-Buy scheme which was recently given a final extension due to similar problem of delays to transactions caused by another lockdown, buyers seeking to complete their transactions in time to benefit from the stamp duty holiday face missing out if the end to the scheme is not tapered.
The current lockdown and pandemic effects have led to increased delays and many buyers and sellers may risk seeing their chains falling through and collapsing if they are unable to complete within the current deadline. This then causes more disruption to the already volatile housing market and ripples out to the wider economy at a time when we need the market to remain strong.
The suggested tapered end to the Stamp Duty holiday would mean that any buyers that have had their mortgages accepted by the end of the deadline would have an extra three months to complete on the transaction and still benefit from the tax relief. This would rescue many transactions that have been calculated with the purchase based on stamp duty relief figures and will also take the pressure off lenders and conveyancers to carry out operations whilst still managing Covid restrictions.
Paul Broadhead, Head of Mortgages and Housing at the BSA said: “The Stamp Duty holiday not only enabled a return to a fully functioning housing marketing, it’s likely to have had much wider economic benefits as new homeowners increase their spending on furniture, appliances and ancillary services such as removal companies, cleaners and decorators. The Chancellor will also have reaped some reward through the associated VAT payments.
“However, the unprecedented increase in property transactions, which together with the necessary Covid-19 restrictions, have resulted in unexpected delays in completing house purchases. Those already in the house buying process anticipate benefiting from the rate reduction and should not be penalised because of Covid-related delays in the process that are completely out of their control.
“It would be unfortunate if the positive effects of the Stamp Duty holiday unravelled for the sake of a short extension. A three months tapered end, similar to the one announced this week for the Help to Buy: Equity Loan, is, therefore, a small but necessary change.”