The chancellor is set to make the announcement that the deadline for the tax break will be pushed back by three months in his budget on Wednesday 3 March.

Organisations including the Building Societies Association (BSA) and Intermediary Mortgage Lenders Association (IMLA) have been among a chorus of voices calling for the deadline to be tapered after 31 March to avoid a ‘cliff edge’ scenario for buyers and industry professionals.

Meanwhile, in a column for Mortgage Finance Gazette Andy Scaife of ONP Group said the deadline should be extended for those people who had exchanged contracts to enable them to benefit from the duty.

However, the plans for a full three-month extension until the end of March – which will bring the stamp duty holiday ending in line with the lifting of restrictions in summer – have this morning received criticism.

John Eastgate, managing director of property finance at Shawbrook Bank, said the extension would deliver a ‘soft landing’ for those transactions already in the pipeline and fearful of missing the current end date.

But he added: “Just changing when it ends doesn’t tackle the challenge of how to deliver a graceful and managed exit from an incentive that has served its purpose.”

Tapering the end

David Westgate, group chief executive of Andrews Property Group, said it was ‘simply kicking the can down the road’ and favoured a tapering rather than a complete extension.

He added: “We will have the same cliff edge scenario in three months with buyers desperately rushing to complete sales, but facing delays due to conveyancing issues.

“Conveyancers are already struggling to work their way through the growing pile of cases accumulating on their desks.

“Extending the deadline to the end of June will simply add a whole lot more cases to the bottom of the pile, and clog up the system.”

Westgate also thought, the lifting of restrictions over the Spring period would further fuel the property market at a traditionally busy time thus causing transactions to go ‘through the roof’ and cause more bottle necks.

“A much better solution would be a tapered end to the stamp duty holiday to allow conveyancers the time to work their way through cases,” he said.

“By allowing transactions, where a mortgage offer has been granted before the end of March, to complete at their own pace, the cliff edge scenario could be avoided.”

Guy Harrington, CEO of residential lender Glenhawk, also backed a tapered ending. “Whilst a short extension was inevitable given the backlog of transactions, stamp duty has been a strong revenue generator for the government and at a time when it can ill afford to be bleeding money, this is not a long term solution,” he said.

“As with Help to Buy, a tapering of sorts would ensure that the relief continues to benefit those most in need, whilst avoiding a situation similar to after the first lockdown where transactions fell by as much as 50%.

“A housing market correction would only further add to the already considerable economic woes facing UK consumers.”

Artificial bubble

Indeed, Simon Nosworthy, head of residential conveyancing at London law firm Osbornes Law has warned against extending the stamp duty holiday over concerns it has created an ‘artificial bubble’ which has led to high house price rises which will inhibit first-time buyers getting onto the property.

He said: “Conveyancers like me and estate agents have probably never been busier thanks to the holiday. There have been lawyers having to turn away business while some local authorities have struggled to keep pace with the number of searches requested.”

And he added: “The holiday has reportedly saved house buyers £5 billion, which is unsustainable for the exchequer.

“While the holiday has fuelled house moves, the property market had already roared back into life after the first lockdown. It is therefore reasonable to believe that the market would still be in decent shape when the holiday ends.”

Reform of stamp duty

Nosworthy said keeping the tax break permanent would be the ideal outcome – a sentiment echoed by Mark Arnold, CEO, Kensington Mortgages, who questioned whether it was time for reform.

“The chancellor should, in our view, make the threshold permanent,” he said.

Research by Kensington found keeping the stamp duty at its current threshold of £500,000 could lead to a fiscal surplus for the UK treasury of £139 million a year, generated by higher transaction volumes, increased property prices, household consumption, and housing market activity.

Arnold said: “It’s the equivalent of 37,000 more property transactions each year. Reform could also lead to greater regional mobility – with ancillary trickle-down benefits – and stimulate downsizing, freeing up family homes and address the UK’s vital stock shortage.

“Permanent reform seems like a no brainer.”