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.”