A leading Cheshire conveyancing solicitor has said that adding three months to the stamp duty holiday is excessive and could lead to more challenges for homebuyers.
With the average house move taking around 10 weeks, pushing back the end of the stamp duty holiday means a whole new set of buyers will have the opportunity to start the process of purchasing a property in the hope of completing before the new deadline.
However, Chris Illingworth, solicitor and member of the conveyancing department at Warrington-based Watsons Solicitors, believes that many in this new group may still miss out if there are continued delays with mortgage approvals, property searches and general turnaround times with conveyancers due to the volume of transactions.
In addition, the stamp duty holiday itself has stimulated the housing market to the point of prices rising by about seven per cent during a period of economic recession, and now likely to rise further, which Chris fears could result in people being unable to buy their new home.
The previous deadline was 31 March and many people were on a cliff edge as to whether they would benefit – if their house move went through after 1 April, they would be liable for the stamp duty, which often runs into the thousands of pounds.
Chris also believes that very few sales would have fallen through because of this, based on his experience of the previous stamp duty holiday following the 2008 recession. Renegotiations on prices, and deals between buyers and sellers to split the cost of the stamp duty were commonplace then, and there is nothing to suggest that this would not be the case again.
He said: “Conveyancers expected the housing market would go very quiet in lockdown, but the opposite has been true: it’s been incredibly busy for the last ten months across the industry and at Watsons Solicitors.
“A shorter one-month extension would have enabled those who were close to missing out to make it through the process. Extending it now for three months opens up the discount to a whole new wave of people to come through it, who will likely be facing exactly the same issues as 30 June gets closer.
“Rather than supporting the housing market and keeping things steady, this stamp duty holiday has actually increased house prices following more demand. Pushing the deadline to 30 June could continue to see people priced out of moving.”
The 2008 stamp duty holiday, brought in by then-Chancellor Alistair Darling in the wake of the financial crisis, suspended the tax for a year on properties worth up to £175,000. The current holiday suspends the tax on the purchase of homes up to £500,000.
Following the three-month extension, Chancellor of the Exchequer Rishi Sunak also announced that the level at which no stamp duty is paid will be £250,000 until the end of September, only returning to the previous level of £125,000 on 1 October.
Chris added: “People who had already set the wheels in motion would have, in the vast majority of cases, still proceeded had there been no extension.
“They are a long way on in the conveyancing process and already invested a couple of thousand into moving. When you’re factoring stamp duty in the lower levels they’d be losing as much by pulling out as they would by continuing, if they’re able to.
“People will also have gone through that mental and emotional turmoil of getting ready to move as well.”
Watsons Solicitors, which has been established for more than 60 years, specialises in family law, employment law, wills and probate, personal injury and conveyancing.
The team of experienced solicitors each hold various accreditations and memberships of professional bodies relevant to their expertise, while the firm’s partners oversee all areas of work.