The stamp duty holiday was hugely successful in enticing homemovers back to the market during an uncertain time. It helped motivate the market following the first national lockdown where many realised it was time for a change.
While this was great for buyers that could save thousands during the tax break, industry professionals soon felt the pressure. As demand built, it became more difficult to push cases through. Firms had to adjust to working from home, with less staff available. Delays became longer and more frequent, particularly as local authorities struggled to keep up with the demand for searches.
The effects of this logjam are still being felt today, so it is no surprise that there has been a mixed reaction following the Chancellor’s announcement.
Speaking at the Spring Budget, Rishi Sunak confirmed an extension of the stamp duty holiday, leading buyers to breathe a sigh of relief. He confirmed that the £500,000 nil-rate band will run until 30 June 2021, granting a three-month extension of the original holiday. There will be a subsequent tapering from 1 July 2021, where the nil-rate band will become £250,000, double the usual threshold. It will only return to the standard level of £125,000 from 1 October 2021.
While this has been well-received by prospective buyers, concerns from professionals are now being raised.
As buyers were starting to see beyond the end of the stamp duty holiday, the announcement of the extension has made it a priority once again. The extension has been welcomed by thousands of homebuyers with transactions currently underway. Although the sense of urgency has reduced, for now, it is expected that demand will be sustained until the end of June, where buyers stand to save the most. Although buyers should still be prepared to pay stamp duty charges, thousands of movers still stand to benefit.
For many buyers, the additional charges for purchasing outside of the stamp duty holiday are the difference between affording their new home and not. After the deadline, buyers will have to save more to compensate for these charges. We expect many to bring forward their move, to benefit before the new deadline. This will naturally leave fewer transactions for the end of the year, where we expect demand to decrease.
The wake of the first national lockdown saw many firms adjust to new, restricted working conditions. From the furlough scheme to working from home, operational changes had to be made to continue working through the pandemic. With fewer staff and a surge in cases to contend with, pressure built up in the industry.
As time went on, expectations to complete cases in time for the original stamp duty holiday deadline intensified. Now, with an extension and tapering of the deadline confirmed, there is an air of caution in the industry as to how demand will be affected.
The end of the stamp duty holiday is expected to bring back more manageable workloads to the industry. Although the spike in demand has been great for business, the struggles to see cases through to completion amid pressure from clients have been challenging.
For several firms, some pressure was relieved by taking on more staff to assist in transactions. However, if workloads decrease with demand following the end of the tax break, concerns are being raised for job security towards the end of the year.
Questions for conveyancers to consider following the official extension of the stamp duty holiday:
· Do you think the demand for conveyancing will change, both during and after the stamp duty holiday?
· How do you think the extension will affect the current logjam in the process?
· Have you noticed a change in your client’s attitudes now that the urgency has been reduced?
