Time is ticking and thousands of property buyers and sellers are rushing to beat the stamp duty holiday deadline in March 2021. The major headache for many is they are caught in a massive backlog through no fault of their own, and this is why many are urging the UK Government to extend the deadline.
The UK is on the move, and this has been due to in no small part to the outbreak of the Coronavirus. Over recent months, 100,000s of sales and purchases have been agreed, and a big percentage of these are now caught up in an enormous backlog.
When selling a house, there is massive reliance on others such as solicitors, conveyancers, lenders, estate agents, local councils etc. Many people who are stuck in lengthy chains will be keeping their fingers crossed they will be able to complete before the 31st March 2021 deadline, and as this date approaches stress levels will be rising.
The argument against extending the deadline
There is an obvious argument against extending the stamp duty holiday deadline, and this is the vast amount of revenue it generates for the government; over £10 billion each year. Some will say that this is a drop in the ocean when compared to the figures attached to the furlough scheme etc. In normal times and with my sensible cap on, I would ‘t be for extending the holiday. However, these are far normal times.
One significant aspect born from the pandemic is many businesses are experiencing crippling staff-shortages, these include those involved the property transaction process. This is mainly due to the government guidelines on self-isolating where people have had contact with someone known to have the virus.
The argument for extending the deadline
Many Brits who have decided to move didn’t do so just to save on stamp duty; they felt it necessary to move somewhere that they feel safer. No doubt many of you will have read reports and seen the data showing that the lure of living in a major built-up area is rapidly diminishing, and this makes obvious sense.
The continually rising number of deaths and the mind-boggling number of positive cases each day has given people around the world a taste of what the future might hold, and many understand there’s no guarantee something like this will not happen again.
This week, property industry bodies have written an open letter to the government requesting an extension to the deadline. Industry bodies fear that a vast number of sales will collapse and this is in my opinion, due to one or two within a large chain who have decided to move with the stamp duty saving in mind. With property chains, if one party has a change of mind, the whole chain collapses unless they can be quickly replaced.
We asked Paresh Raja, CEO of Market Financial Solutions for his thoughts on the matter; “The Stamp Duty holiday has been a great success in stimulating property investment. While other sectors face hardships, the property market has benefited from a sustained surge in buyer demand for residential real estate.
With the holiday coming to an end on 31st March 2021, we are now facing the opposite problem – the market simply does not have the capacity to meet buyer demand. Mortgage providers are taking longer to process applications, and the lack of available loans has made findings the right type of finance difficult for prospective buyers.
My concern is that this will lead to a backlog of sales, and could result in many buyers missing out on the holiday due to the fact that lenders are simply not able to release the volume of loans needed.
The government has two choices. The first is to extend the SDLT holiday beyond the current deadline. The second is to put into place arrangements to ensure that buyers who have agreed to a sale prior to the deadline still qualify for the tax relief should the sale occur after 31st March 2021.
Regardless, it is important that mainstream and alternative lenders ensure they are ready and to meet the growing market demand for finance. This will be vital in supporting the UK’s post-pandemic recovery.”
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