The housing industry is pleading with the government to extend the current stamp duty holiday by a further six months, as homebuyers race against the clock to get their moves over the line before the deadline of March 31, 2021.
In July, Chancellor Rishi Sunak announced a temporary stamp duty holiday that cuts the tax rate to 0% for all properties priced £500,000 and under.
This was to encourage home buyers after the industry shuttering and prolonged uncertainty of the original coronavirus lockdown. Savings of up to £15,000 were incentive enough to kickstart activity – but with time running out, here’s what you need to know about the current state of play in the property market.
Will the stamp duty holiday be extended?
So far, the government hasn’t announced any further details on the chance of the current stamp duty holiday being extended beyond March. Housing minister Christopher Pincher said in the commons last week: “The government does not plan to extend stamp duty relief, and will continue to monitor the property market.”
However, property professionals and trade bodies representing estate agents, conveyancers, surveyors and mortgage brokers have banded together, writing a joint letter to the government asking for the stamp duty holiday to be extended by at least another six months and for any announcement to be made before Christmas.
It takes homebuyers an average of 123 days to purchase a home, Emma Harvey, director of mortgages at MoneySuperMarket, tells HuffPost UK. “As it stands, the stamp duty holiday scheme is due to come to an end at the end of March meaning prospective homebuyers have just 20 days left from November 9 to find a property and apply for a mortgage in order to complete,” she says.
Research suggests a strong desire from Brits for an extension to the scheme, and an industry primed for activity, she adds. “During this second lockdown, estate agents and lenders have adapted quickly to ensure the housing market doesn’t stand still. Viewings are still going ahead with measures in place, while lenders are also continuing to work hard to get sales through.”
Other areas of financial relief and support have already been extended more than once, including the furlough scheme Could there be changes here too?
“We have seen the government react quickly, so we certainly can’t rule it out,” says Harvey, but she believes it’s unlikely the industry and buyers will be notified of any extension until closer to March, which “will make it touch and go for many buyers hoping to complete a sale at the start of the year”.
What’s happening to house prices?
With so many looking to take that next step on the property ladder, house prices have been increasing as buyers flood to the market, especially at price-points where the tax savings are the greatest.
The property portal Zoopla has reported record-high sales agreed post-lockdown and it’s estimated at a total of 418,000 sales worth £112bn.
“House prices are rising at an annual rate of 3%, the strongest rate of growth seen in two and a half years,” says Gráinne Gilmore, head of research at Zoopla. “Prices are being underpinned by the levels of demand in the market, and there are now 50% more sales in the pipeline than this time last year.”
So, what’s holding property sales up?
Despite the UK now being in a second lockdown, mortgage applications are continuing to surge, currently at a 12-year high, as many British residents look to buy or sell their homes to take advantage of the ongoing stamp duty holiday.
This has caused serious delays to the mortgage, conveyancing, and surveying processes, which could result in some buyers missing out on the stamp duty holiday in the limited time window. What’s more, the sector’s processing capacity has been reduced by the shift to working from home and property transactions are taking a lot longer than normal. This is delaying the turnaround from an average 12 weeks to 20 weeks, according to the open letter.
“During the summer we saw the pent-up demand from the first lockdown come to the market. The sustained levels of demand since then point towards the market now being driven by a ‘once-in-a-lifetime’ reassessment among some homeowners about how and where they live in the wake of lockdown,” Gilmore explains.
“The delays in the market are being caused by the sheer volume of activity,” she adds, with activity highest among households who already own a home.
And if stamp duty holiday isn’t extended?
If there’s no extension, thousands of sales could fall at the final hurdle and this will have a knock-on effect on the housing market which has so far recovered well from the Covid-19 slump. “We could feasibly expect to see a real slowdown in the market as the discount is retracted,” Harvey adds. “Some people will pull out of deals.”
As restrictions from the second lockdown continue and the industry deals with a massive backlog of conveyancing admin in the run up to Christmas, delays are going to be inevitable and it’ll mean some will face an anxious wait.
Buyers and sellers are rushing things to fast-track a house move, but this could mean vital details are overlooked, which in turn, could hold things up further.
Gilmore advises buyers hopeful of meeting the March 31 deadline to have as much information upfront as they can – and mortgage financing in place.
″While the stamp duty holiday has likely brought forward much activity that would have taken place into 2021, the current trends in the market, with a greater rise in demand from existing homeowners who have more equity at their disposal, means it is likely activity in this part of the market will continue past the stamp duty holiday,” she says.