On behalf of the property sector and our customers who are in the process of selling and purchasing a property, I seek to impress upon you the importance of extending the Stamp Duty Land Tax holiday deadline to avoid the breakdown in property chains and provide more time for our customers to complete their property transactions.
Delays are beyond our customers’ control
Pent-up demand from Brexit and Lockdown has created a surge of activity in the housing market since reopening in May 2020. The Stamp Duty Land Tax holiday announced by Chancellor Rishi Sunak, as well as the termination of the existing Help to Buy Scheme added further fuel to the fire, with people who perhaps weren’t in a rush to move, bringing forward their plans to find a new home. As a result of the pent-up demand and sense of urgency created in the market with people pushing to get their transactions completed by the deadline, despite the property market being in lockdown for two months, the overall volumes of transactions are expected to be greater than those seen last year.
Currently, conveyancers are dealing with record volumes of transactions, which has delayed the process. Mortgage applications, surveys and local searches are also all taking significantly longer as a result of the high volumes of transactions. There have been reports that pipeline conversions (exchange of contracts) in recent months are as low as 9%, they should be triple that. This is resulting in more and more sales that are stagnating and not progressing, with the average property transaction time lengthening from 12 weeks to 20 weeks.
The industry does not have the capacity to deal with the volumes of transactions that need to be processed within the timeframe of the deadline. According to Zoopla, there are around 140,000 more people waiting to complete sales compared with this time last year, however, only a quarter of transactions (based on sales agreed in January 2021) will complete by 31 March 2021. Data from TwentyCI reveals that approximately 325,000 buyers with a Sale Agreed from September 2020 to January 2021 will miss out on the Stamp Duty Land Tax holiday.
Our customers should not be penalised as a result of the delays currently being experienced within the sector that are beyond their control. A delay that could result in our customers having to pay up to an additional £15,000, most likely out the funds attributed to their deposit, on the purchase of their property
Breakdown in property chains
Another concern is that buyers will continue to offer on properties expecting to benefit from the Stamp Duty Land Tax rate reduction but in reality, they may already be too late. Failure to complete transactions before 31 March 2021 could see the breakdown of chains with buyers potentially financially unable to continue with the purchase, as they would not have budgeted for the additional expense of paying Stamp Duty Land Tax. An extension would ensure that many more transactions would be able to complete without the risk of falling through.
Additionally, significant stress will be removed from all parties involved, especially for the surveyors, conveyancers and lenders who bear the brunt of their customers’ demands. It will also save money that would be lost if the transaction falls through. Money that would have been spent on things during the property buying process such as surveys, searches and the like will also be lost if the property falls through.
Extension of the Stamp Duty Land Tax holiday
We urge the Government to consider extending the Stamp Duty Land Tax holiday by a further six months to reduce the risk to the consumer. We also propose that the Government work with the industry to develop a method to help smooth the end of an extended Stamp Duty Land Tax holiday to prevent a cliff edge in the property market.
Swift action by the Government will ease the pressure on both our customers and the industry, allowing more transactions to complete, avoiding possible break downs in property chains and a distressing period for movers. Any extension or gradual phasing of the Stamp Duty Land Tax would also assist in lessening a possible sharp decline in consumer demand, which would have a knock-on effect on the greater economy. The housing market is intrinsically tied to the economy’s health with home movers spending £12 billion a year on home-related purchases excluding property purchase and transaction costs. Moving home has many advantages to other aspects of the economy, so action taken by the Government to energise the property market will have a positive impact on the financial health of the country as a whole.
Lyttons Estate Agents Ltd