The sudden end of the stamp duty holiday at the end of March could throw away the market gains achieved in recent months, a leading property industry commentator warns.
David Alexander, who runs UK-wide property management firm D J Alexander, says the financial support the Westminster government has provided through the stamp duty holiday has encouraged investors to buy, individuals to move despite uncertainties caused by the pandemic, and tenants to seek greater security in their homes.
However, with the SDLT threshold extension about to end in March, and projected large scale increases in unemployment, there is a serious risk of the market hitting a financial cliff edge which could result in a sudden fall in property values.
If this is coupled with a dramatic increase in Capital Gains Tax on second homes and investment properties - as has been suggested by advisers to Chancellor Rishi Sunak - then much of the recent growth in the market could dissipate quickly.
“The fast-growing property market has been one of the surprises of the pandemic with few predicting that it would be so buoyant over such a prolonged period. The SDLT threshold extension undoubtedly contributed to this boom along with buyers' changed priorities and shifting housing demands initiated by owners and tenants’ reactions to the lockdown” says Alexander.
“It would be a shame, and potentially damaging to the economy, if the gains of the last year were simply lost through a sudden ending of the stamp duty holiday” he continues.
“The most sensible and balanced approach would be to continue the threshold extension and phase it out over six months to a year to ensure there is no sudden collapse in the spring. In this way we could ensure some continuity and stability in the property market at a time when many may feel that there is very little certainty in employment, finances, or the wider economy.”