Estate agents, surveyors and solicitors are pleading with the government to extend the current stamp duty holiday by a further six months, as homebuyers face a race against time to get their moves over the line.
Mortgage approvals and legal work are progressing slowly as lenders and lawyers struggle to keep up with demand from movers looking to benefit from savings of up to £15,000.
Here, Which? explains how the stamp duty cut has energised the property market and discuss whether the government could extend the deadline beyond 31 March 2021.
Stamp duty holiday brings demand and delays
In July, the government temporarily introduced higher stamp duty thresholds as it sought to encourage home moves after the COVID-19 lockdown. This means movers can save as much as £15,000 if they buy a home before 31 March 2021.
The cut has certainly reignited the market, but the rush to buy before the deadline has resulted in delays.
Estate agents, lenders, surveyors and conveyancers are all facing huge pressure on resources, resulting in everything from mortgage valuations to legal formalities taking longer than before.
Zoopla says that around 140,000 property sales are currently in the pipeline – double the number usually seen at this time of year.
The property portal says 92% of sales agreed in November and 81% of sales agreed in December are completed before the end of the following March in a normal year – but this year is anything but normal.
So those waiting until after Christmas to make an offer may face disappointment, with only half of sales agreed in January normally getting over the line before the end of March.
Industry calls for stamp duty extension
Earlier this week, a group of property professionals united to write to the Chancellor to request that the stamp duty deadline be extended.
The joint letter is signed by 14 trade bodies, including estate agency, surveying, conveyancing and removals associations.
The group is requesting that the government extends the stamp duty holiday by at least six months, and has asked for an announcement to be made before Christmas.
Mark Hayward of the estate agency group NAEA Propertymark says: ‘The stamp duty cliff edge on 31 March could cause thousands of sales to fall at the final hurdle and have a drastic effect on the housing market.
‘We are calling for a rethink of these timings, so pressure on the system can be released to allow transactions to complete and avoid a disorderly and distressing period for movers and businesses.’
Will the stamp duty cut be extended?
So far, the government has maintained that the 31 March deadline won’t be extended.
Last week, in response to a question in the House of Commons, housing minister Christopher Pincher told MPs: ‘The government does not plan to extend stamp duty relief, and will continue to monitor the property market.’
It remains to be seen whether the pleas from the industry will prompt the government into a rethink.
What can you do to speed up your move?
Last month, the Home Buying and Selling Group, which is made up of professionals from across the property industry, published a pledge to help moves progress more quickly.
It also provided advice for buyers and sellers on some simple steps they can take to speed up their transactions.
For buyers, it recommends appointing your conveyancer and getting a mortgage agreement in principle before making an offer, and arranging a house survey soon after the offer has been accepted.
For sellers, it advises instructing conveyancers at the same time as putting the property on the market (rather than after an offer is accepted), and completing the property information form ahead of time so any issues can be raised at the earliest opportunity.
Stamp duty holiday: how it works
In July, the government announced that it would raise the threshold for paying stamp duty on property purchases from £125,000 to £500,000 in England and Northern Ireland.
With first-time buyers already benefiting from a £300,000 allowance, home movers purchasing more expensive properties stand to make the biggest savings.
These buyers can save £10,000 on a £400,000 property, or £15,000 on a £500,000 property.
In Scotland and Wales, the savings are less significant, with the stamp duty thresholds having only been increased to £250,000.
What’s happening to house prices?
House prices have been increasing as buyers flood to the market, especially at price-points where the tax savings are the greatest.
Overall, values have remained robust, with the latest data from the Land Registry showing that prices increased by 0.7% month-on-month and 2.5% year-on-year in August.
The property portal Rightmove has reported asking prices rising to record levels, but it’s important to remember that the prices sellers are requesting don’t necessarily reflect those that buyers are paying.
While there’s a great deal of optimism around the market at the moment, experts have raised concerns that prices could fall once the stamp duty holiday ends, especially if uncertainty surrounding COVID-19 and Brexit continues.
This could be problematic for buyers rushing to buy before the stamp duty deadline, as increased competition may mean some are overpaying now to secure properties that may fall in value next year.
Which? Money Podcast: the stamp duty clock is ticking
On last week’s Which? Money Podcast, we investigated the current state of play for people looking to move home.
We spoke to experts, including Kevin Roberts of Legal & General and Aniesha Beveridge of Hamptons International, about the stamp duty holiday and the future of the housing market.
You can listen to the full episode by clicking the link below.
