Thu 25 Feb 2021
Much of the agency industry has reacted with delight at the extension of the stamp duty holiday deadline until June.
Rightmove estimates an additional 300,000 property transactions in England could benefit from the extension to the tax saving, based on previous HMRC data. If the additional 300,000 transactions made it through, buyers could save £1.75 billion in total.
The portal adds that based on the current sales that have been agreed in England, 80 per cent would pay no stamp duty.
There are an estimated 628,000 sales in total still currently in the legal process across Great Britain, including those that were agreed last year and those that have been agreed so far this year. Currently, Rightmove estimates that 100,000 buyers who agreed a purchase last year are set to lose out, if the deadline stays as March 31.
Lucian Cook, Savills’ head of residential research, comments: “Coming at a time when demand is outstripping supply, extending the holiday until the mid-year point may also bring more stock to the market and allow the spring sales market to function more normally.
“It also reduces the risk of a sharp lull in activity at a time when the furlough scheme is currently due to end and will help carry the market through the period of peak economic uncertainty. By the end of June the economy will be beginning to reopen and those active in the market will have greater confidence in their future finances.
“Memories of lockdown will still be fresh in people’s minds underpinning demand from those planning a move for more space or for lifestyle reasons, particularly given the availability of mortgage terms at still record low rates.”
Dominic Agace, chief executive of franchise network Winkworth, says: "This is great news, as it helps all those who, through no fault of their own, were set to face unexpected costs arising from a deadline set two lockdowns ago.
“This will ensure the property market maintains its positive influence in the economy in the tricky next few months as we start a sustained covid recovery. I do hope that longer term stamp duty reform isn’t forgotten.
“Ultimately, the property market needs longer term reform as well, to ensure it is a healthy functioning market, allowing people to achieve their aspirations and supporting the economy in the long term.”
Iain McKenzie, chief executive of The Guild of Property Professionals, says this is “Great news. Hundreds of thousands of transactions have been caught up in the logjam caused by the rapidly approaching deadline and many people face being penalised through no fault of their own.
“While it would be positive to see an extension, an abrupt end to the stamp duty holiday, whenever it happens, could cause harm to the economy and disrupt the property market. A gradual phasing out of the scheme would ensure that consumers still waiting to complete aren’t hit in the wallet and would make more sense, as a cliff-edge at any time is an unnecessary threat.
“Considering property transactions are taking longer to complete, if there is no gradual phasing introduced, buyers entering the market now will need to be prepared to pay stamp duty.”
Patrick Littlemore, chief executive at Marsh & Parsons - the London agency chain owned by LSL - comments: “The Stamp Duty Holiday has been a positive in the pandemic climate. An extension of it is most welcome, especially for all parties currently working towards an exchange of contracts.
“The availability of property in London and the current lending climate, makes this point in 2021 a fantastic opportunity to move home – the extension only reinforces that. It will no doubt boost activity in the spring market.
“This in combination with the Prime Minister’s plans to ease lockdown, especially the physical return to schools, should have a positive impact on the family house market in particular.”
David Alexander, joint chief executive of property management platform Apropos and a prominent Scottish agent, adds: “There is now a requirement for the Scottish Government to match the expected announcement by Rishi Sunak in next week’s Budget. If the finance minister Kate Forbes fails to match the stamp duty holiday there will clearly be a negative impact on the Scottish housing sector.”
Benham and Reeves director Marc von Grundherr comments: “Thousands of homebuyers across the nation will be breathing a huge sigh of relief over the announcement to extend the current stamp duty deadline, having spent months on end waiting to complete with no finish line in sight.
“That said, those currently working in overdrive to clear the backlog of transactions at the legal stages may feel differently, with many more months of long days now on the cards.
“We’ve seen the market pause for breath in recent months as a huge influx of buyer activity has subsided as the deadline approached. With this extension, we can expect yet another mad scramble by homebuyers to secure a saving and while they can continue to expect long delays while doing so, this will ensure that market sentiment remains high and prices continue to climb.”
According to Ben Taylor, chief executive of Keller Williams UK: “The original stamp duty holiday was on course to save homebuyers as much as £1.5bn in tax and so this extension will further boost this figure and ensure that many more benefit as a result.
“Despite the wider economic backdrop, hunger for homeownership remains high and this latest news will further wet the appetite of homebuyers and help keep the market stable until such time that normality has fully returned.
Mark Hayward, chief policy advisor at Propertymark, states: “Speculation that the stamp duty holiday will be extended is good news for the property sector.
“Since the holiday was first announced, we have continually worked to galvanise the industry and lobby government to rethink these timings due to our concerns that a cliff edge in March could cause thousands of sales to fall at the final hurdle and have a knock on and drastic effect on the housing market which has recovered well from the Covid-19 slump.”
However, he insists that any extension should not produce just another cliff-edge at a later date, but should be phased out or, to use the favoured term, ‘tapered’.
Hayward continues: “We know from our own research that the majority of estate agents expect to see an increase in the number of failed sales if the stamp duty holiday ends at a cliff edge so we need government to consider a tapered end to the holiday so that buyers aren’t forced to pull out at the last minute and the property market can continue to thrive.”
That concern is uppermost for David Westgate, group chief executive of Andrews Property Group, who says: "Extending the stamp duty holiday by three months is simply kicking the can down the road.
"We will have the same cliff edge scenario in three months with buyers desperately rushing to complete sales, but facing delays due to conveyancing issues.
"Conveyancers are already struggling to work their way through the growing pile of cases accumulating on their desks. Extending the deadline to the end of June will simply add a whole lot more cases to the bottom of the pile, and clog up the system.
"Also, bear in mind that with lockdown restrictions due to be lifted, this will fuel the property market as we come into the traditionally busy Spring period. Transactions could go through the roof causing more bottlnecks in the conveyancing process.
"A much better solution would be a tapered end to the stamp duty holiday to allow conveyancers the time to work their way through cases.
"By allowing transactions, where a mortgage offer has been granted before the end of March, to complete at their own pace, the cliff edge scenario could be avoided.”