Stamp duty breaks have historically done little to help the housing market - and it’s the same now.
So says David Hannah, principal consultant at Cornerstone Tax.
“Throughout other economic crises, stamp duty changes or relief have historically done very little to get the market moving again and there is no reason why it would help this time around either. It has been and still is a poor tool for managing market behaviour” claims Hannah.
“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."
Whilst Hannah believes the long term benefits of a holiday are few, he acknowledges the short term impact of the current tax break.
The current holiday means homebuyers across England and Northern Ireland pay no stamp duty when purchasing homes up to a value of £500,000, with a reduced rate for homes above that. For someone buying a £500,000 property, the saving is worth £15,000.
Hannah says the specifics of this holiday will bring about a cliff edge in demand next March “at the exact moment we expect employment and incomes to be suffering most” with the end of the furlough scheme in particular.
"It is critical that the government reviews this stamp duty holiday, and either announces an extension or amends the tax payment date so that homebuyers can still take advantage of the holiday even if they cannot complete by March 31 next year” insists Hannah.
“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 concludes.