Property market still open during lockdown but will disruption mean more miss out on stamp duty holiday?

David Hannah, Cornerstone Tax, discusses property market still open during lockdown but will disruption mean more people miss out on stamp duty holiday?

In welcome news for many homebuyers, the government has announced that the housing market in England will remain open throughout the second national lockdown, as long as everyone follows the Covid secure rules.

This will be a relief for numerous homebuyers who are currently in the process of buying new properties, and are hoping to cash in on the Chancellor’s stamp duty holiday, which ends next March.

However, the boom in house sales since the stamp duty holiday was announced during the initial lockdown, have led to conveyancing, surveying, mortgage and search services being overwhelmed. A second national lockdown will only exacerbate this problem, and lead to further delays in the supply chain system, particularly as sellers and agents will now have to follow a stricter set of rules in order to limit the spread of Covid-19.

These include only two households being in a property at the same time, including the agent. If buyers are from separate households, one buyer will need to wait outside the property while the other person views it. Sellers are also advised to vacate the property during viewings, and open all doors and windows to keep good ventilation. Many sellers will undoubtedly ere on the side of caution, and pull their homes from the market until it feels safer to sell.

Research from Twentyci found that the huge backlog in the housing supply chain means that roughly 325,000 homebuyers who agree to purchase a property before the end of the year, are expected to miss out on the stamp duty holiday. If one in five buyers decides to pull out of their purchase because they will not complete before the deadline, the loss of 325,000 sales would cost the economy £4 billion.

David Hannah, Founder and Principal Consultant of Cornerstone Tax, discusses why the government needs to review this stamp duty holiday in light of the second lockdown, to prevent the cliff edge of 325,000 people who believe they will still benefit missing out:

“Now that we’ve entered the second national lockdown, it is critical that the government reviews this stamp duty holiday, to allow the conveyancing, surveying, mortgage and search services who are already overwhelmed, to continue supporting homebuyers despite further delays that this new lockdown will inevitably bring.

“The government either needs to announce an extension or amend the tax payment date so that homebuyers can still take advantage of the holiday even if they cannot complete by 31st March next year. The most preferable option would be a phasing out of the holiday, to avoid those who are currently in the process of purchasing their properties, essentially being thrown off a cliff-edge.

“The government needs to do more to help get people get on the property ladder – government-backed purchase mortgage guarantees for borrowers would be a great way to reinstall confidence in the lending market. If the term of these guarantees were for five years, for example, the inflation of the housing market during the medium term would wipe off any negative equity on those properties. This would give the market some security again, help buyers, and get the market moving again.”

Kindly shared by Cornerstone Tax

Main article photograph courtesy of Pixabay