Stamp Duty Conundrum

I reckon Rishi Sunak has got himself a bit of a challenge with this stamp duty holiday that ends on the 31st March. Obviously this initiative (to move the stamp duty threshold up to £500k until the end of March 2021) has been a huge success and has led to many more transactions and has helped to push property prices up. HOWEVER, seasoned investors know that on average a property transaction takes between 4-5 months to complete, and possibly more, so in order to meet this March deadline the transaction needed to have started in November last year, and in fact many conveyancers and valuers have refused to take work since then if the purchase rested on the stamp duty deadline.

How might this affect the UK property market?

Twentyci have estimated that 325,000 sales from 2020 are under threat of missing the deadline and believes that 31,250 sales will be abandoned this month. This is a disaster for the economy as people moving home are estimated to spend £4,018 per sale on furniture, electrical goods, soft furnishings, DIY, kitchens, bathrooms and cars in the year after a move. In addition, the direct impact on GDP of housing transactions is £37,750 per home move.

But what can Rishi do?

It is very unlikely that he will extend the stamp duty holiday period but he won’t want to lose that positive hit to the economy and I suggest he may end up creating a half way house and say that although the deadline isn’t extended there is a moratorium for those transactions stuck half way (maybe he will say if you had an offer accepted by the end of December 2020 for instance) and those transactions can still be completed and go through after the date. What a conundrum.

Wishing you health, wealth and happiness,

Gill Fielding

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