With less than 90 days until the stamp duty holiday deadline ends, there are growing calls for an extension beyond 31 March after England entered a new nationwide lockdown.
In a televised address on Monday evening, Boris Johnson told people across the country to stay at home, except in specific circumstances, until at least mid-February.
But cabinet office minister Michael Gove yesterday suggested that the latest lockdown might not be eased until March at the earliest as he warned the country faces a “race against time” amid surging coronavirus cases and hospital admissions.
This means that while people can still move home and complete on housing transactions, subject to strict Covid safety measures, there are likely to be further backlogs and delays in the property buying process, which in turn means many purchasers will almost certainly miss the stamp duty holiday deadline at the end of March.
Calls for the holiday to be extended by up to six months were already being made at the end of last year as agents, surveyors and solicitors lobbied the government.
A letter was sent to the government with the backing of several industries bodies and major players in the industry citing the reasons why the extension would benefit the industry, the economy and most importantly people in the process of purchasing a property.
But the government has so far rejected calls to extend the temporary relief offered to property buyers via the stamp duty holiday. But that could be about to change.
Andrew Montlake, who is managing director of mortgage broker, Coreco, explained: “Though the property market remains technically open, there will now be considerably more logistical issues for the simple reason that a lot of people will be working from home.
“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.”
The stamp duty holiday means homebuyers across England and Northern Ireland pay no stamp duty when purchasing homes up to a value of £500,000, with a reduced rate for homes above that. For someone buying a £500,000 property, the saving is worth £15,000.
The end of the holiday on 31 March will bring about a cliff edge in demand, alongside fallout from Brexit and Covid-19, according to David Hannah, founder and principal consultant of Cornerstone Tax.
He commented: “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 31st March.
“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.”