The temporary Stamp Duty Land Tax (SDLT) cut, announced by the Chancellor in July in a bid to get the property market moving once more following its closure during lockdown, has certainly done its job. Residential property transactions shot up by 15.6% in August and by a further 21.3% in September, as buyers scrambled to take advantage of a tax cut that would save them thousands of pounds on their property purchase.
By increasing the threshold at which SDLT is paid on property purchases from £125,000 to £500,000, Mr Sunak suggested, nearly nine in 10 buyers would pay no Stamp Duty at all, resulting in an average Stamp Duty reduction of £4,500.
Law Society calls for action
While the SDLT cut has certainly achieved its objective of getting the property market moving once more, the surge in demand from buyers desperate to complete their transaction before the Stamp Duty Holiday ends, combined with operational restraints as a result of the pandemic, mean that transaction times are getting longer. As a result, the abrupt cut-off deadline of 31 March is putting enormous pressure on solicitors and other professionals in the conveyancing process to facilitate moves ahead of the deadline.
The Law Society is among the key players in the property industry to have called on the government to reduce the enormous pressure on property professionals. Law Society president for England and Wales, David Greene, said:
“Many factors limiting the speed of a move – delays in the issues of searches, delays in mortgage offers, problems in the chain and with dependent transactions – are usually out of the control of the conveyancer. An extension to the deadline, or introducing appropriate transitional arrangements, would help release the growing pressure on the conveyancing system.”
Property industry bodies join the call
Meanwhile, a group of 14 property industry organisations, including The Guild of Property Professions, the Residential Property Surveyors Association and the House Buying and Selling Group, have penned an open letter to the Chancellor demanding urgent action. They outlined their concerns that the property industry does not have the capacity to deal with current demand, with operational constraints lengthening transaction times from 12 weeks to 20 weeks. “We are concerned that consumers continue to offer on properties expecting to benefit from the SDLT rate reduction but in reality they may be too late.”
In order to remedy the situation, the group called for the government to:
- Announce an extension of the Stamp Duty holiday of at least six months before Christmas in order to reduce the risk to the consumer.
- Work with the industry to develop a method to help smooth the end of an extended Stamp Duty holiday to prevent another cliff edge.
The industry is waiting with bated breath to see whether Rishi Sunak will heed its calls. In the meantime, buyer demand shows no sign of abating as buyers fight to push their transaction through ahead of the 31 March 2021 cut-off.
With just 21 weeks to go until the deadline, research from PropCast reveals that there are already regions where it is unlikely transactions will go through in time, including London, Oxford, Winchester, Sunderland and Durham, among others. At the time of writing, 70% of cities still offer buyers a good chance of successfully completing their transaction, the property demand forecasting tool suggests.
At your service
At Woodfines, our experienced and dedicated conveyancers are doing all they can to assist clients in completing their transactions ahead of the Stamp Duty holiday deadline. To find out how we can help you complete your property transaction swiftly and efficiently, please contact us at firstname.lastname@example.org