Failed Sales fear as Stamp Duty Holiday cliff edge approaches
The latest National Association of Estate Agents Propertymark market snapshot comes with a warning from chief policy advisor Mark Hayward that: “We are increasingly concerned about the pressure … on the property industry with 69 per cent of estate agents expecting to see an increase in failed sales due to buyers realising their sales will not complete ahead of the deadline. It’s important that action is taken now to prevent this and support the property sector.”
His call for action comes as the online petition calling for an extension to the holiday passes another critical milestone – the 125,000 mark – and the government finally agrees to a Parliamentary debate, which will be at 4.30pm on Monday, February 1.
In the meantime, property professionals continue to warn of dire consequences of a cliff edge, and one veteran agent is suggesting the government’s apparent intransigence over an extension could even cost it revenue in the long term.
Agency owner and PropTech entrepreneur David Alexander says in his area – Scotland – the stamp duty equivalent, Land and Buildings Transaction Tax, would actually bring in more money to the Scottish Government if its current holiday was extended.
He says the Scottish Government’s latest figures show that LBTT revenues from Q4 2020 – when the holiday was in full swing – have increased by £38.2m which is a 32.1 per cent year on year rise compared with the final quarter of 2019.
The figure for last month alone rose by 44 per cent which was £18.4m more revenue than the equivalent number for December 2019.
This is because, just as in England with stamp duty, the LBTT holiday has triggered such a large increase in purchases that the ‘no duty’ holiday effects are negated for the Scottish Treasury.
“These figures show that reducing the tax level paid on residential housing transactions has actually substantially increased the revenue the Scottish Government has received. A near 50 per cent year on year increase in revenue during December, at a time when there are few signs of growth in the economy, cannot be ignored” says Alexander, who is joint chief executive of the apropos PropTech platform.
“The reduction in LBTT, effectively forced on the Scottish Government by the actions of Rishi Sunak lowering stamp duty in the rest of the UK in July, has resulted in substantial increases in revenue at a time when it is most needed to restart the economy after Coronavirus” he continues.
“Indeed, there is a case for easing the rates at all levels. The Scottish government has previously insisted on maintaining higher tax rates compared to the rest of the UK for first time buyers, investors, landlords, and properties above a certain value.
“At a time when there has never been a greater need to maintain the financial stability of Scotland, isn’t now the time to reconsider this policy in favour of higher returns over political posturing targeted at its voter base.”
Yesterday we reported that an accountancy firm, Hillier Hopkins, has called for the government to, as a minimum, extend the stamp duty holiday to those properties that have exchanged but yet to complete, or even better, extend the holiday through to September.