Speculation that The Chancellor of the Exchequer, Rishi Sunak, may be about to announce the lifting of the threshold figure at which buyers start to pay Stamp Duty caused a stir yesterday.
The Times set the hare running by saying that the level could be lifted to as much as £500,000. Soon the story was all over the media.
For many months there have been calls for SDLT to be suspended, abolished, or altered and the effects of the Covid crisis have added pressure on Sunak to act.
Prime Minister Boris Johnson has said a number of times in the past that he wants to overhaul stamp duty, calling it a “huge problem”.
The Chancellor is due to make a summer statement this Wednesday (8 July) and it is expected that he will announce plans for SDLT that will be implemented in the autumn Budget – which is not due until October.
Property professionals know only too well what can happen when a change in process or taxation is announced but not implemented for weeks or months.
The market either rushes to beat a known deadline (think of the ending of MIRAS or introduction of HIPs) or, it seizes up as buyers or sellers pause their purchasing plans to take advantage of a possible forthcoming beneficial change – such as not having to pay SDLT.
Twitter lit up with comments warning the Chancellor of the likely consequences that could flow if he leaves any gap between announcement and implementation
Buying agent Henry Pryor wrote:
“Either announce that you are changing Stamp Duty or announce that you are not but please don’t announce that you are thinking about whether you might – or the market grinds to a halt as buyers & sellers wait to see.”
Ed Mead, head of Viewber, tweeted:
“Why on earth would you trail this – either do it or don’t do it. Market will now go quiet as people wait. Madness…”
“Please implement stamp duty holiday immediately. As a homebuyer I will simply delay the purchase otherwise and so will everyone else. The £15k I save will be spent in the real economy on home improvements etc.”
“Do you have any idea what pre-announcing stamp duty holiday is going to do to the CURRENT housing market which is healthy? Use Rightmove stats not out of date Gov figures. Stamp duty needs to be reduced NOW or an announcement made that you will NOT be acting in Autumn.”
“Treasury/No.10 should stop flying kites. Latest example: announcement of a stamp duty holiday, but not until the autumn, could kill the housing market in the meantime.”
“Why brief it? Chancellor now has only two choices. He MUST either cut stamp duty right away or rule out a cut in the Autumn. To do otherwise could ruin the housing market for months to come.”
“Rishi Sunak, stamp duty holiday was something many of us called for back in April doing it now is a tad late for all those awaiting completion. Announcing that you are going to do it in Autumn just stalls all buyers for 3 months. People in our governments are literally clueless!”
“I’m trying it sell my home and buy a new, bigger one. I will now tell my agent to remove the ad… Announce it or clear this up immediately or stall economy.”
“I’m a solicitor and my specialism is conveyancing. We are very busy at the moment and what the government may not realise is in light of this suggestion, lots of chains are now holding off exchanges and completions to “see what will happen” this causes market stagnation.”
Sure enough, by late yesterday afternoon there was proof positive of the effect of the speculation.
Mark Montgomery, Chief Strategy Officer at Simplify, told us:
“Across Simplify we’ve already had hundreds of instances where existing clients have told us they will want to slow down or pause their transaction until it is clear what is happening with Stamp Duty.
“While no client who was due to complete today has delayed a completion, we have had a significant number of clients who have specifically asked to delay exchange of contracts until after the announcement.
“We have also seen 30% of new clients expressing concern and suggesting they would delay their transaction so as not to miss out on any stamp duty saving – so the impact is already significant.
“While some clients will continue irrespective of any announcement there will be many where the potential Stamp Duty savings are just too significant to ignore.
“It only needs one client who feels that way to stall a chain and, given the widespread press coverage, it would take a lot now to convince consumers that there isn’t a plan for a Stamp Duty Holiday in the autumn if the reports were accurate but it has been ‘announced’ prematurely.
“The best solution now is undoubtedly for the government to go ahead with the Stamp Duty Holiday immediately or risk a major housing market slowdown, just when things were getting moving again.
Peter Ambrose, of The Partnership, highlighted the concerns of customers:
“We have received a number of calls today from clients asking about the Stamp Duty changes.
“Some of those most concerned had already exchanged contracts, so the uncertainty as to the timing of any potential change is very worrying.
“Obviously we don’t know whether any change will apply to properties that have not exchanged (like the last change) or those that have not yet completed.
“Either way, we remain concerned that if, as is rumoured, any changes do not come into place until later in the year, that this will have a negative impact on the market.”