The national lockdown beginning on Thursday makes the case for an extension to the stamp duty holiday, according to a tax lawyer.
David Hannah, founder of Cornerstone Tax, says a much-publicised risk of up to 325,000 buyers missing the March 31 deadline for the current SDLT holiday is ramped up by the prospect of an England-wide lockdown for four weeks.
“It’s critical the government reviews this stamp duty holiday, to allow the conveyancing, surveying, mortgage and search services who are already overwhelmed, to continue supporting homebuyers despite further delays that are likely to be fuelled by a second lockdown” explains Hannah.
“The government either needs to announce an extension or amend the tax payment date so that homebuyers can still take advantage of the holiday even if they cannot complete by March 31 next year. The most preferable option would be a phasing out of the holiday, to avoid those who are currently in the process of purchasing their properties, essentially being thrown off a cliff-edge” he continues.
Property consultancy TwentyCi says the average time from agreeing a sale to completion is five months, meaning sales agreed now may not go through before the tax break ends; this has given rise to the speculation that there may be 325,000 purchases at risk of missing out.
TwentyCi also calculates that if one in five buyers pulls out of their purchase because they will not complete before the deadline, the percentage of sales falling apart will rise from 23 per cent now to 53 per cent by March, when taking into account the subsequent impact on purchase chains.
Hannah continues: “The government needs to do more to help get people get on the property ladder - government-backed purchase mortgage guarantees for borrowers would be a great way to reinstall confidence in the lending market.
"If the term of these guarantees were for five years, for example, the inflation of the housing market during the medium term would wipe off any negative equity on those properties. This would give the market some security again, help buyers, and get the market moving again."