Almost a third of home buyers would abandon their purchase if they missed the 31 March deadline for taking advantage of the Government’s stamp duty holiday, according to a new survey.
The survey asked 1,000 people who were currently in the process of buying a home whether they would continue with their purchase if the sale did not complete before the deadline.
Of those, 31 per cent said they would not. The question was asked by the Guild of Property Professionals.
Home movers will benefit from a stamp duty holiday until 31 March
The average value of these properties was £232,500, meaning the buyer would face a stamp duty bill of £2,150 – unless they were a first-time buyer.
‘If buyers are unable to complete because of not having the stamp duty money in place, we will see a large number of transactions fall through as a result,’ said Ian McKenzie, chief executive of the Guild of Property Professionals.
Under the scheme, those buying a property that costs less than £500,000 will not pay any stamp duty.
Those buying more expensive homes will only start to pay the tax on the amount that they pay for the property above £500,000. Previously, that threshold was £125,000.
This current holiday applies whether you are buying your first home or have owned property before.
Holiday has boosted housing market
The scheme was launched in July 2020 and was intended to stimulate the housing market which took a hit in the early days of the pandemic.
For example, property transactions fell by around 50 per cent during the first national lockdown.
According to the Treasury, housing transactions have increased since the relief was introduced and were 8 per cent higher in October 2020 than October 2019.
Calls are now being made for the stamp duty holiday to be extended.
Almost 25,000 people have signed a petition on the issue, and property experts are in agreement.
According to estate agent Hamptons International, 100,000 more homes would be sold if the stamp duty holiday was extended until the end of 2021 – a 10 per cent increase on what would normally be expected.
‘An extension could see transaction numbers in Britain next year bounce back to 2016 levels, or around 1.2million sales,’ says Aneisha Beveridge, head of research at Hamptons.
‘Pushing back the end of the stamp duty holiday would not only help those who may miss the current deadline by a small margin, but it will particularly help first-time buyers and second-steppers in more expensive parts of the country’.
The Treasury said stamp duty was an important source of income and would be reinstated
But in a response to the petition published on 10 December, the Treasury said it had no plans to do so.
‘As the relief was to provide an immediate stimulus to the property market, the government does not plan to extend this relief,’ the response read. ‘[Stamp duty] is an important source of government revenue, raising several billion pounds each year to help pay for the essential services the government provides.’
However, it does plan to maintain a level of stamp duty relief for first-time buyers when the holiday ends.
Sales completed in December could squeeze through
Hamptons believes that sales agreed by the end of December are more likely than not to complete before the end of the stamp duty holiday.
The agents said that last year, 61 per cent of sales which were agreed in December 2019 went on to complete before the end of March 2020.
Lucian Cook, head of research at Savills, said he expected a surge in transactions before 31 March, followed by a more quiet period after the deadline passed.
‘We do expect a lull in housing market activity in the aftermath of the stamp duty holiday, particularly among those potential buyers who are relying on the saving to give them enough equity to allow them get a competitive mortgage,’ he said.
However, he did not see a large number of sales falling through as a direct result of the stamp duty deadline being missed, particularly on more expensive homes.
‘It is more likely that buyers and sellers who a keen to move come to an agreement on how to deal with the situation, especially at the top end where the stamp duty holiday has been the icing on the cake rather than the Victoria sponge.’
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