A tapered end to the stamp duty holiday could boost the economy by £28bn according to calculations made by Trussle and Legal & General Mortgage Club. 

The SDLT holiday is currently due to end on 31 March, and it’s estiamted as many as 105,000 property transactions could collapse if buyers are unable to complete before this deadline. 

Given this average UK property price of £269,150, this could mean the value of these lost transactions could be as high as £28bn.

In contrast L&G Mortgage Club and Trussle say, a ‘tapering off’ of the holiday could be an alternative and fairer way to bring the scheme to a close. 

This would involve guaranteeing the tax break to buyers who have already received a mortgage offer, helping to avoid the collapse of chains dependent on the savings from this tax break to complete. This would also prevent an additional swath of purchasers from rushing in, adding to the current pressures.

There has been widespread speculation that the chancellor Rishi Sunak will extend this holiday in the budget next week. 

Trussle and L&G says any extension to the holiday should therefore be targeted at helping people already well underway with their property purchase, and avoid any future cliff edge ending of the scheme.

Tapering the holiday could support medium term growth in the housing sector too, it says, supporting jobs at a time when thousands of workers have been furloughed and contractors laid off. The sector already supports 700,00 jobs, according to the Home Builder’s Federation and it is a critical component of the Government’s recovery plans and ambition to ‘Build, Back, Better’.

For consumers, a tapered ending to the SDLT holiday would also help protect homebuyers from unexpected financial strain. A failed house purchase can be a costly affair for buyers, with a late stage collapse costing on average £5,439.80 in estate agent fees, valuations, surveys and legal costs.

A tapered end would mean that those just starting to consider a house purchase would not benefit from the SDLT holiday, but L&G and Trussle point out support exists, such as the Help to Buy Equity home. In addition, first-time buyers are already exempt from stamp duty on the first £300,000 of the property price for purchases in England and Northern Ireland. Those in Scotland and Wales are exempt from Stamp Duty up to the first £175,000 and £180,000 respectively.

Trussle head of mortgages Miles Robinson says: “There’s been some discussion about simply extending the stamp duty land tax holiday beyond its current deadline. However, this is unlikely to solve the problems posed by a hard stop to the scheme as we’d still find ourselves in a situation where thousands of homebuyers miss out and have to front the unexpected SDLT bill.

“There will be a significant number of current buyers who are dependent on the savings from the holiday to be able to afford their house purchases, and it’s likely that many will pull out if they are unable to complete in time to meet the 31 March deadline. 

“A ‘tapered’ ending, that guarantees the holiday to buyers already in the process, could avert a situation where we see thousands of housing transactions collapse. With the Budget fast approaching, we’re calling on the government to consider taking another look at how to bring the scheme to an end.”

Legal & General Mortgage Club director Kevin Roberts, adds: “Amid concerns about the wider impact of the Covid-19 pandemic, the Government’s decision to offer a SDLT holiday last year has helped to position the housing market as a driving force behind the economic recovery.

“However, the pandemic has also caused delays in the housing market and our research shows that at the peak of activity it was taking up to 17 weeks to complete on a property purchase. 

“This means there are consumers who started their homebuying journey last year in the hope of taking advantage of the tax incentive, but who are now unlikely to complete before the current deadline. Some of these buyers might not have put aside the funds to pay for stamp duty, which could mean their purchase falls through.

“Overall, we would like to see a broader review of property taxes including SDLT to assess the different impacts on an evolving property market.”