Will the stamp duty holiday be extended?
- Published: Tuesday 08 December, 2020
- By: Commercial Trust
Debate on whether the stamp duty holiday will be extended is a current hot topic for the industry and for the economy.
Lobbying on support of an extension is in full force.
Andrew Turner, chief executive of Commercial Trust Limited, has a strong view on the matter, which he shares below.
Lobbying from the industry
Numerous estate agents and other professionals in the property industry have written to their MP’s, in a bid to gain support for extending the stamp duty holiday.
In addition to individual lobbying of MPs, an industry backed letter organised by The Guild of Property Professionals has been sent to the government.
The letter explains the various benefits that an extension would have to the sector, the economy, and also to consumers in the process of buying a property.
An extension of six months is being sought, which the signatory organisations feel is necessary to ease the pressure on industry professionals, who are currently experiencing a significant rise in transactions.
This rise in transactions is largely attributed to consumer’s fears about missing the stamp duty holiday, and thus an extension would be particularly beneficial.
The Guild of Property Professionals has suggested that those in the industry should continue to press for this extension, via their local MPs, and has provided a template letter that can be used.
It appears that a standardised response is being issued by MP’s on the matter:
“I welcome the temporary cut to Stamp Duty Land Tax for home buyers across England and Northern Ireland until the end of the financial year.
“The Temporary Stamp Duty Land Tax (SDLT) cut will temporarily increase the Nil Rate Band of Residential SDLT, in England and Northern Ireland, from £125,000 to £500,000. This applies from 8 July 2020 until 31 March 2021 and cut the tax due for everyone who would have paid SDLT. According to the Treasury’s Plan for Jobs, nearly nine out of ten people getting on or moving up the property ladder will pay no SDLT at all as a result of this change.
“I welcome this measure as a crucial intervention to ensure medium-term confidence in the property market and maintain the growing momentum since the easing of lockdown.
“I am confident that this action to support the housing market is protecting and creating jobs. In England and Wales, an estimated 240,000 people are directly employed by house builders and their contractors, and between 500,000 and 700,000 employees are indirectly supported in the supply chain. Moving to a new house also boosts the economy, with estimates suggesting that doing so drives additional spending worth about 5 per cent of the house value.
“There is strong evidence to suggest that the temporary cut to SDLT is having the desired effect, with a 14.5 per cent rise in residential property transactions in July, followed by a 15.6 per cent rise in August. This is in addition to the 30 per cent increase in construction activity in July.
“I understand concerns regarding the backlog of transactions and the impact this could have on people whose purchases may complete after 31 March and I will alert my ministerial colleagues to the strength of feeling on this matter.”
Data shows positive impact of SDLT holiday
The message clearly supports the stamp duty holiday, in its present form. Furthermore, the data arising from this change is demonstrably very positive.
Receiving this response from MP’s is a glimmer of hope for many in the property industry and is a step closer to achieving an extension.
“Strong chance of an extension”, says Turner
Andrew Turner, chief executive of specialist buy to let and commercial broker Commercial Trust Limited, gave his opinion on a possible extension:
“I think there is a strong chance the government will extend the current stamp duty holiday.
“The property industry fuels the economy. Putting in place a cliff-edge end point to the stamp duty holiday is not something I think the government will want to do, given the impact that would have.
“There is only a finite number of solicitors to process these property transactions, who will be breaking for Christmas very shortly.
“I do not believe the government will want to be faced with large numbers of people unexpectedly being handed large tax bills, because their solicitor was unable to meet the 31st March deadline, due to the volume of work they face.
“It may be that any extension of the stamp duty holiday might take a different format. But, it would come as no surprise to me if some measure is put in place to mitigate the outcome of an immediate stop.”
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.