Thousands of residential property transactions could collapse if the stamp duty holiday ends next month, MPs warned yesterday.
A cross-party debate heard that transactions worth billions of pounds were at risk unless the tax cut was extended, with signs that some deals are already starting to fall through.
There was general support from both the Labour and Conservative MPs who took part in the 65-minute online discussion for an extension to the stamp duty holiday, while Sarah Olney, the Liberal Democrat MP for Richmond Park, argued against extending the scheme, as it would, in her view, “deprive the Treasury of much-needed funds at a time when there are many extremely pressing calls upon our public finances”.
Mark Hayward, chief policy adviser, Propertymark, commented: “We are pleased to see that there is clearly cross-party support for a holiday extension or tapered end given the concerning cliff-edge is now only two months away.
“The housing market boom, caused by the stamp duty holiday, has been hugely beneficial; however, the stamp duty cliff edge on the 31st 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 slump.”
Jesse Norman, a treasury minister, appeared to suggest the March 31 deadline would remain in place, pointing out that the stamp duty holiday was designed to be a temporary relief to stimulate market activity and support jobs that rely on the property market.
However, he did make an interesting comment when he said the government acknowledged the “strong feeling on this issue”, adding that he “fully understands the frustrations of those who are, as we speak, in the process of purchasing a property”.
But ultimately, he concluded that it was not appropriate to “comment on tax policy outside a fiscal event” during the debate.
It means agents, homebuyers, conveyancing solicitors, mortgage lenders, surveyors, and indeed MPs will have to wait until the chancellor Rishi Sunak’s Budget on 3 March to see if he will announce whether or not the relief will be extended.
“Whilst the government chose not to use the debate as an opportunity to either extend or end the stamp duty holiday, Jesse Norman did appear to adopt fictional radio talk show host Fraser Crane’s opening catchphrase as his sign off,” said Anthony Codling, CEO, Twindig. “Although he didn’t quite say ‘good afternoon United Kingdom, I’m listening’ he did say the government will continue to listen carefully”.
He added: “No change in policy and the mood music of his comments was that although like Fraser Crane, he’s listening, the stamp duty holiday has already achieved its aims and Wales and Scotland have already decided not to extend.”
There was a lot of talk of “the unnecessary cliff edge” being presented by the end of March deadline in the debate but above all else stands the “crowning unfairness” that those who did act in good time will still lose out because conveyancing delays have ballooned to such extremes, according to Iain McKenzie, CEO of The Guild of Property Professionals.
He commented: “There was much talk of the unnecessary cliff edge being presented by the end of March deadline in the debate but above all else stands the crowning unfairness that those who did act in good time will still lose out because conveyancing delays have ballooned to such extremes.
“That is hardly the fault of buyers. The minister was effectively saying that the strict time limit imposed on the scheme was by design, and it succeeded in its intended consequence which was to fire the starting gun on a very sudden and sharp increase in demand, producing positive ripple effects in the wider economy.
“However, in extreme circumstances like these, the government should feel empowered to at least preserve the tax break for all those who have already entered into a transaction. Without these changes, the consequences for the market as buyers back out of purchases could be devastating, undoing all the economic halo effects they claimed to have been targeting.
“The reluctance to take action runs in the face of so much cross-party dissent concerning the scheme’s obvious flaws. It’s clear there’s a lot of support among MPs on all sides to deal with this.”
Kevin Shaw, group managing director of residential sales at LRG, concurred: “We strongly back the calls for the extension of the stamp duty holiday, which would encourage continued and much-needed momentum in property sales, as well as provide a welcome boost to the wider economy.
“We have found that 9.5% of home buyers have said that the holiday not being extended would seriously affect their decision to buy, which would have a negative impact on market sentiment and subsequently the volume of house sales.”
Bruce Burkitt, founder of Property Experts, welcomed the decision to debate extending the stamp duty holiday end date following a recent petition on the UK government’s website, which has now attracted more than 140,000 signatures.
He said: “In the middle of a national crisis the holiday injected extra life into the market and incentivised purchasers across all levels of the market in a time of great uncertainty, so it would be a shame to halt that whilst we’re still in the midst of the pandemic.
“In my opinion, it would be beneficial to the market should the SDLT holiday be extended, even if it is tweaked to include at a minimum properties that have exchanged but are yet to complete, especially as many have been delayed due to the impacts of the current lockdown, which is slowing down conveyancing and the completion process as a whole.
“At a time when the UK economy is still below pre-pandemic levels the benefits of a strong and prosperous housing market cannot be understated and supports a wide range of industries, so there are also benefits to the Government to extend the holiday period.
“The demand in the market has remained strong, which has undoubtedly been sustained by the removal of stamp duty, especially in the first-time buyer market.
“There are also other buyers with various needs, whether it’s due to changing demands of what they want from a home or for personal reasons, or families for example looking to upsize in order to accommodate and care for elderly relatives. It would be a tremendous shame to lose the momentum built thus far.”
The heralding of “The Great Debate” was akin to watching a Netflix trailer where after watching two hours of a film, you realise the “Best bit” was the advertising trailer.
The level of argument was sentimental at best with views from Diane Abbott trying to make a special case for her beloved Hackney to the deferential Tory MP who missed out on stamp duty when buying his several million-pound property in Holland Park trying to sound empathetic to the issue under debate. Of course, Kevin Hollinrake MP, contribution to a subject where he personally benefits by increased activity in completed sales only complimented the low brow debate
“heard that transactions worth billions of pounds were at risk unless the tax cut was extended, with signs that some deals are already starting to fall through.” reflected the tangible analysis of the situation under discussion.
It seems that to be asked to comment as an ‘Industry leader” speaking for the masses, you must possess two qualities. These being the ability to keep repeating the populist view created by constant reference to sound bites, in this case, “Cliff Edge” and to possess a higher level of naivete and total oblivion to political platitudes when listening to Government Ministers.
Phrases such as ““strong feeling on this issue”, adding that he “fully understands the frustrations of those who are, as we speak, in the process of purchasing a property” is a throwaway line that means absolutely nothing.
What else would you expect Jesse Norman to say?
The fact that both Wales and Scotland have already declined extending the deadline, should be the real concern.
If I was Mr Steele, after having heard the debate… best chase those builders along and get the sale completed!
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A good summary. I watched the debate and although it wasn’t very inspiring I was left with the impression that a short, tapered reintroduction of SDLT is a likely option when the Budget happens in early March.
There also seemed to be universal loathing for SDLT which is useful. If it’s overhauled at some point it will result in more mobility and higher transaction volumes.
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Careful what you wish for.
If they abolish a ‘Buyers Tax’ it will no doubt be replaced with a ‘Sellers Tax’ try getting the little old ladies and gentlemen out of their large family homes into a more fitting ‘retirement’ property. Even now they wince at a few thousand for moving being asset rich and cash poor they fear for every penny.
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I’m sure you’re right in that tax changes always seem to leave people worse off than before, although in the scenario you describe at least the tax could be paid from the proceeds of the sale rather than from cash which, for a FTB or a ladder-climber, is quite hard to obtain along with a larger deposit.
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Absolutely couldn’t agree more! Profit on house sales for sellers are almost guaranteed, whilst thousands of FTB are struggling to raise deposits & are now restricted on where those deposits come from.. massively imbalanced & needs completely undoing …
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“The level of argument was sentimental at best with views from Diane Abbott trying to make a special case for her beloved Hackney”
Love her or loathe her well if Hackney is not a special case I don’t know what is. It’s a little bit beyond “sentimental “Hackney Council had been cyber attacked in October which has frustrated work in progress investigated by The National Crime Agency.
In addition we live in unprecedented times, 3 lockdowns since the date was set .,staff shortages which weren’t envisaged last summer as lockdown eased
It makes no sense in the coming weeks with a vaccination programme in place to have people rushing around potentially endangering public health in an attempt to meet the deadline
A tapering is required to ease the pressure
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Actually I think Diane Abbot as an MP is excellent and the issue with hacking at hackney Council, very real. The debate yesterday however was not the forum to highlight “My backyard” as yard stick for the rest of the country. Ms Abbott has enough experience, influence and respect to have highlighted the plight of Hackney in private.
With regards to the health issue, I couldn’t agree more except the same cautionary approach has never be seen to be adopted wholesale by the public with many anecdotes of viewings with unqualified buyers and those clients reactions to being refused to view.
Just a though but had the Industry totally locked down like so many others, the case for SDLT holiday extension would have been cast iron.
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I never ever thought I would hear the words Dianne Abbot and excellent mentioned in the same sentence. Who can ever forget her her extraordinary interview when she had no idea how much it was going to cost to more police. Incredible.
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It’s funny you lot always mention Diane Abbott yeah fail to mention all the other mps who make series maths mistakes.
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It’s laughable that it’s not viewings, valuations or surveys that are holding everything up but conveyancing.
The one aspect of a house transaction that you can do without leaving your desk!!!!
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Oh yes! So true ..the agents, viewing people & surveyors are doing a stellar job & maintaining excellent support & communication with their clients & purchasers despite being inundated with viewings & enquiries. On the other hand just try speaking with your solicitor & you’ll be met with a host of unreturned calls & excuses or the latest for me.. she’s on holiday so I’ll ask her to call you back when she’s in the office?? When you do eventually speak there’s a tone of bewilderment as to why you need to call? I’m not personable, helpful & friendly I’m a solicitor acting for you, go away & use those little glo markers that are stuck all over that report I sent out. Sign there & post it back but be warned the post is terrible! Oh I’ll drop it in as it’s very important (contains bank details etc).. oh no we can’t do that.. It’s no surprise whatsoever that conveyancing solicitors are holding everything up is it ..
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Should have left Ms Abbott on mute.
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Abbott shows how low the bar is in this country to become an MP, you just need a thick skin.
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I don’t know, Smile. As the child of immigrants to have made it to grammar school, graduated with a masters from Cambridge, worked in the civil service, had a successful journalism job, been the first black female MP and held that seat since 1987 having done 5 years previously with the council, I’m not quite sure where you think the bar should be set?
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Common sense is a good starting point. Some of the dimmest people i know and have worked with are ‘Highly Educated’ and given she achieved a 2.2 the locally poly had more astute students.
Think you have been rather kind with a spin put on her ‘career’
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Not with a woman who cannot add up. She may be acedemic but that does not make her a good politician. A woman who sent her own son to private school who when he attacked her with a pair of sicssors and when helped by the police who she constantly calls racist offered not one word of thanks and wants to abolish provate education so that no one can have the education she gave her own son.
Yea lovely person.
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Why don’t you take a hard look in the mirror.
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Unless the delays in Conveyancing are resolved any extension will just have the same issues at the end.
Needs the industry to pull together as some of the properties that could fall through on 31st March have been agreed 4/5/6 months ago. I am aware of sales agreed mid 2020 and the sols still can’t promise it will be done in Q1.
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Buyers and sellers will always come together to buy a house, as houses are what people want. At what price though, well that is where a decent estate agent comes in to secure top price, where others do nothing and let the seller and buyer agree, costing thousands to the seller for not squeezing more.
Thereafter, my goodness the conveyancers have kept the industry paid and afloat since March 2020, meandering through the dramatic public numbers rushing towards them because Boris said ‘buy a house before 1 April and pay no stamp duty’, properties with defective titles, stressy clients, and ‘I have nothing to offer but I can we have an update’ agents.
And yet they will continue to battle through to 1 April….and from their kitchen tables where Boris said to stay at home.
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but no decision has been made? the headline is misleading
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I switched off after 6 minutes as it looked like a weak production with people not seeming to take it seriously or not knowing the script. On a point mentioned more than once here” sales are already beginning to fall through” note to you who are suffering this, either the sale wasn’t a good fit in the first place or you aren’t good at your job!
there are two months left and you are making poor weak excuses, if that is the strength of your argument then give up now lest you get an extension then we need to ready ourselves to hearing all these moans again when the can or cliff edge is kicked down that road, please God, no.
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I suspect some agents have been pushing the stamp duty angle too late in the day. Not worried about any of our deals as I’ve been saying since November they should consider it a bonus not a given.
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