Phase It Out – Calls grow for ‘tapered’ end to stamp duty holiday
Pressure is building on the government to agree a tapered end to the stamp duty holiday, even if a full-blown extension now appears unlikely.
There’s still an online petition gathering momentum for an extension – you can see that here – but now the latest request for a phased end to the holiday comes from the Yorkshire Building Society
It says the current cliff edge deadline of March 31 may not give enough time to complete transactions for those who have already agreed sales and had mortgages approved.
So the YBS wants a three month taper – a period of grace allowing any property sales which have been agreed and have secured a mortgage approval by March 31 until June 30 to complete their transaction with a stamp duty reduction.
The grace period would exclude new mortgages approved after March 31, says the building society, and they would not be entitled to a reduction.
Nitesh Patel, strategic economist at Yorkshire Building Society, says: “This is already likely to be a very busy period for lenders and other professionals involved in the house sale process.
“Social distancing measures are likely to still be in place, which will make it more challenging to move at speed.
“As well as helping buyers, we think this is a sensible approach which will ease the pressures likely to build on lenders and the rest of the residential property industry immediately before the deadline. This solution would be help to give everyone involved a better outcome and help more people to have a place to call home.”
His suggestion comes as a new survey suggests nearly one in three buyers will pull the plug on deals if they miss out on the stamp duty holiday.
In a survey of 1,001 purchasers conducted for the Guild of Property Professionals, 31 per cent say they would very likely cancel their move if they had to pay stamp duty.
While there are over 140,000 more people in the process of buying a new home now than this time last year and an estimated 418,000 homes sales progressing to completion according to Zoopla, and with many having been prompted by the stamp duty holiday, there are growing concerns over plans for the re-introduction of stamp duty in April 2021.
With the current threshold set at £500,000 and the average house worth £244,513 many would be set to save in stamp duty.
However, under current plans, from April 2021 the threshold returns to £125,000, leaving those who thought they would benefit from the stamp duty holiday having to find extra cash to complete the move.
Guild chief executive Iain McKenzie says: “If the deadline remains as it is, only a quarter of the sales agreed in January will complete in time. With 140,000 more people waiting to complete sales than this time last year, there will be a significant number of buyers who will have to find additional money for stamp duty if they have not budgeted for it.
“Our hope, and the hope of 71 per cent of the public, was that the government was going to extend the stamp duty holiday, or at the very least, introduce a phasing out period that will ease the pressure on all parties involved, and will prevent a cliff edge.”
Over a third of those surveyed said that stamp duty had a big financial impact on the amount they paid, while a further 46 per cent said it had a medium impact on their finances.
The research also found the average value of the property people had bought or were going to buy was £232,500, meaning the average house buyer would face a stamp duty bill of £2,150.
With a third aiming to push through a move quickly to take advantage of the holiday, McKenzie warns many would not have budgeted for this added cost: “If buyers are unable to complete because of not having the stamp duty money in place, we will see a large number of transactions fall through as a result.
“The signs are there, the stamp duty holiday has been successful, but we need to ensure a smooth transition back to a normal service.”
The survey was conducted online ; all 1,001 were buying a property in the next year or had bought a property this year. The research fieldwork took place in early December by Atomik Research.