Stamp duty holiday round up

The Stamp Duty Land Tax holiday is making headlines again. The Organisation for Economic Co-operation and Development would like to see it removed entirely to boos the economy and a new petition has surfaced to prevent a cliff-edge of completions if the deadlines were to pass.;
SDLT

Following the chancellor’s Budget announcement on the 3rd of March the Stamp Duty Land Tax (SDLT) holiday was extended until July 2021 and then at a lesser rate until October 2021.

The PRS appeared to have gone quiet on the subject, until this week.

We take a look at a couple of the latest stories surrounding the SDLT holiday and how they can affect landlords across the UK.

Stamp duty scrapped would boost economy

The Organisation for Economic Co-operation and Development (OECD), a multi-country organisation focused on stimulating economic trade has made their opinions about SDLT clear.

They are arguing that the levy on properties should not resume, sighting that the UK has the highest property taxes in the developed world.

Pre-pandemic, in 2019, SDLT was providing the UK Government with £91bn a year. This means that 12% of government revenues were as a result of taxing both the residential and business sectors.

The OECD argues that this is roughly twice the average of the remaining 37 member countries.

The Going for Growth 2021 report issued by the OECD highlights the benefits of continuing the tax holiday on the economy:

“There would be benefits to making this permanent as part of a package that would increase the Council tax to rebalance property market.”

Angel Gurria, the OECD’s secretary-general went on to comment:

“All was not well before the pandemic. Many of our economies have been struggling for more than a decade with slow productivity growth, declining business dynamism, persistent long-term unemployment and very unequal opportunities,” he said.

“The recovery is an opportunity to set our policies right, to achieve growth that is stronger, more equitable, more resilient, and for this Governments have to act now. They have to be bold.”

The call from the OECD has been backed by estate agency group Winkworth, whose chief executive, Domini Agace commented:

“Stamp duty should be permanently reformed. You only need to look at the property market since stamp duty was reformed in 2014 to see the story of a tax that has been overdone. Since then, a period of record low levels of transactions occurred, with this trend being completely reversed by the recent stamp duty holiday.”

“The level of stamp duty currently charged is detrimental to a healthy free flowing housing market and the subsequent benefits it brings to society and the economy.”

We shall be watching the Treasury’s announcements closely to see if they decide to be ‘bold’ with their actions, with the hope to benefitting landlords who are looking to invest in the UK economy.

Whilst some landlords are going to be able to benefit from the extension, it is unclear how many will be forced into a bottleneck of slow deals, come July.

New petition on SDLT holiday

A petition, launched on the 15th of April, has gained almost 2,000 signatures within its first 24 hours.

This petition, aimed at reducing the “cliff-edge” that was foreseen at the last SDLT holiday cut-off, is hoping that the SDLT will be locked in on exchange of contracts.

This way, landlords whose properties are on the edge of being able to complete in time, would be reassured that they won’t be handed a large bill if the property takes a day extra to complete.

Chris Holland, creator of the petition, commented:

“People are finding themselves becoming trapped in a scenario whereby house prices are much higher, and at the same time they will now miss out on the stamp duty holiday. People are being financially punished from both sides, this from a policy that was designed to do the exact opposite.”

“Exchanging contracts is exactly what it says. A contract, a legally binding agreement, to purchase a house often with an immediate 10% deposit being paid. So why shouldn’t you benefit from the stamp duty holiday being triggered at that moment of exchanging contracts, rather than at the point of completion?”

Petitions posted to the official parliament website are guaranteed a government response if they accrue more than 10,000 signatures, and a debate if it reaches more than 100,000.

Earlier this year, a petition on extending the SDLT holiday from March through to September led to a virtual debate in the House of Commons.

If this petition was to go through and become legislation, it would take the pressure of landlords who are uncertain as to whether they can benefit from the holiday or not.

You can sign Holland’s petition by visiting the parliament website here.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.