Rishi Sunak urged to extend stamp duty holiday
Rishi Sunak is once again coming under pressure to extend the stamp duty holiday beyond the 31 March deadline. The introduction of new Tier 4 rules for London, the south-east and east of England, which restricts people from entering or leaving those areas, has reignited calls for the stamp duty holiday to be extended in England.
The recent boom in the housing market is expected to slow significantly next year if the stamp duty holiday is not extended, risking a damaging downturn.
Estate agents, surveyors and solicitors have been lobbying the government to extend the stamp duty holiday by a further six months, as buyers rush to beat the 31 March deadline.
A letter has already been sent to the government with the backing of several industries bodies and major players in the industry citing the reasons why the extension would benefit the industry, the economy and most importantly people in the process of purchasing a property.
But the government has confirmed that it “does not plan” to extend the temporary relief offered to property buyers via the stamp duty holiday.
A spokesperson for HM Treasury last week said: “The SDLT holiday was designed to be a temporary relief to stimulate market activity and support jobs that rely on the property market. The government does not plan to extend this temporary relief.”
However, with millions of people placed into Tier 4 restrictions over the weekend, the government is now being urged to think again on the stamp duty deadline.
George Franks, co-founder of Radstock Property, said: “Though the Treasury has confirmed the stamp duty deadline of March 31 will stand, this government has backtracked and U-turned so many times that frankly anything is possible.
“Just a few days ago Boris Johnson was saying to cancel Christmas would be “inhuman” and yet Christmas, for millions, was cancelled overnight.
“The housing secretary, Robert Jenrick, has confirmed the sales and rental markets, and all associated markets in Tier 4 areas remain open, but in the eyes of a growing number of prospective buyers and sellers there’s a risk they’re starting to feel shut.
“The furlough goalposts have been moved time and again so why not the looming stamp duty deadline, which risks creating a cliff-edge market?”
Adam Feather, from Robert Anthony Estate Agents in north London, is among those calling on the government to extend the deadline and give buyers more time to complete purchases.
Without an extension, Feather fears that the housing market “is poised to grind to a halt” next year.
“The new Covid controls will slow down the market, especially for many of those now living under Tier 4 restrictions.
“An extension to the stamp duty holiday would both support the housing market and the wider UK economy.”
A new study, has revealed that an extension could net the Treasury an additional £139m a year.
The research, by the Centre for Economics and Business Research (Cebr), showed that a tax break would generate more sales, placing upward pressure on property prices, boost housing market activity and raise household consumption off the back of greater asset wealth.
This would mean that while the Treasury might lose around £3.9bn in stamp duty receipts, it would recoup taxes worth about £4.1bn.
Since the stamp duty holiday relief was introduced in July, transactions have increased and seasonally adjusted data shows that in October 2020, transactions were 8% higher than October 2019.
Mark Arnold, chief executive at Kensington Mortgages, which commissioned the research, said: “This research demonstrates what we all intuitively know – that the stamp duty holiday has been very positive for the economy at a critical time. The threshold level should be considered ripe for permanent reform.
“The upper bound estimates of our analysis suggest that the Treasury could have its cake and eat it, achieving a fiscal surplus whilst boosting the economy. It could unlock housing market activity and pay for 4,000 additional nurses in one fell swoop.
“Furthermore, aside from updating the threshold to reflect real world house prices, the maintenance of the £500,000 threshold could address some structural problems with the UK housing market. It could lead to greater regional mobility – with ancillary trickle-down benefits – as well as also stimulate more downsizing, freeing up family homes and helping to address this vital stock shortage.
“We believe now is the time to be bold and keep the threshold at its current position, or at least consider amending it to a higher level than the previous £125,000.”
