Boris Johnson announces new national lockdown
The stamp duty land tax holiday, which began at the beginning of July, has been pivotal in keeping the UK’s property market afloat since the coronavirus pandemic began in early 2020. The first national lockdown in March last year saw the property market put on pause as the public was instructed to remain at home. Since then, the stamp duty holiday has encouraged homeowners to sell their homes and purchase property elsewhere.
The SDLT holiday means homebuyers across England and Northern Ireland pay no stamp duty when purchasing homes up to a value of £500,000.
Homes valued above that threshold pay a reduced rate.
Last night, Prime Minister Boris Johnson announced a third national lockdown as cases of coronavirus continued to soar.
Although the property market will remain open, experts have said there will be more “logistical issues” for those looking to move house.
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Andrew Montlake, Managing Director of the UK-wide mortgage broker Coreco, has said he “wouldn’t be surprised” if the SDLT deadline was extended to allow the property industry to continue operating efficiently.
He said: “Lenders, valuers and conveyancers are already experiencing bottlenecks and delays given the sheer amount of applications going through and the administrative upheaval caused by the latest lockdown will only serve to accentuate them.
“We would not be surprised if the Treasury makes an announcement this week about extending the stamp duty deadline to keep demand alive and give the property industry some much needed wiggle room.”
Property sales are currently under pressure to complete transactions before the stamp duty holiday comes to an end in March.
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According to Rightmove, there are around 650,000 properties changing hands which has overwhelmed certain industries such as conveyancing, surveying and mortgage providers.
Co-founder of Radstock Property in London, George Franks has suggested that the new lockdown will only put more time pressure on transaction periods as people work from home.
The property expert suggested that government should extend the current deadline by “at least” another month.
“I’m sure it’s on Rishi Sunak’s agenda,” he said.
He continued: “The property market is providing vital fuel for the economy and the Treasury will want to ensure that continues during the potentially challenging months ahead.
“Extending the stamp duty holiday is a way for the Government to give people something to cheer about when there’s so little to cheer about, as public sentiment and the property market are closely related.”
While some experts are hopeful the property market will remain robust, some forecasters have predicted a rapid downturn in the housing market this year as the SDLT holiday and the furlough scheme end.
David Hannah, Founder and Principal Consultant of Cornerstone Tax, said an extension to the SDLT holiday will prevent there being a sudden drop in demand.
He said: “It is critical that the government reviews this stamp duty holiday, and either announces an extension or amends the tax payment date so that homebuyers can still take advantage of the holiday even if they cannot complete by March 31.
“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.
“Especially now that the country is being plunged back into another full lockdown, more must be done to help people get on the property ladder and give the market some security in what will be a very turbulent few months.
“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.”
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