The imminent stamp duty holiday cliff-edge has reportedly caused a huge backlog in deals in the property market as thousands of deals have collapsed.
According to property analysts Twentyci, one in five of the 457,358 purchases made subject to contract at the end of 2020 are likely to fall through, whilst 31,250 of the 125,000 sales agreed in January will likely be abandoned.
David Hannah, founder and principal consultant of Cornerstone Tax, suggests the stamp duty cliff edge must be extended or softened in order to avoid a significant fallout for the property services industry, alongside sellers and buyers alike.
Hannah said: “The approaching end of the stamp duty holiday is already having a profound effect on the property market, sale collapses are approaching record highs and solicitors and conveyancers are already reporting that they expect to see a considerable drop in demand very soon.
“Many are expecting to be without anything to do by mid-February.
“Calls to make the holiday permanent or scrap the tax altogether seem unrealistic given the levels of public debt and the £12bn tax take it generates each year, but having such a strict cut-off point, particularly in such a turbulent and difficult housing market and economic climate could result in a a catastrophic drop in demand and prices.
“Raising to the nil-rate band, to somewhere around £300,000, will benefit the majority of buyers without affecting a large amount in tax revenues, which is obviously key to the recovery of public finances.
“These statistics demonstrate the importance of keeping the market moving to other sections of the economy and first-time buyers, those likely to spend less than £300,000, are the driving force behind this movement.
“Homeownership is key to the UK economy, upward mobility and the aspirations of many that are currently struggling to get on the property ladder.
“Not only this but making it easier to move house without being penalised for doing so will make it easier to move to areas of growth and where jobs are.
“Especially important as we see a de-urbanisation and migration away from cities in the wake of the pandemic.”
