The Building Societies Association (BSA) is calling on the Chancellor to taper the end of the temporary reduction in stamp duty holiday, to allow those who are already in the process of buying a new home to benefit from the rate reduction of up to £15,000.
The temporary holiday was introduced in July for properties up to £500,000 and led to a strong recovery following the initial near shutdown as a result of the COVID-19 pandemic.
But the continuing pandemic and a third lockdown have led to increased delays in the home buying and selling process due to social distancing measures, illness and home-schooling, says the BSA.
The BSA suggests that with the 31 March cliff-edge deadline fast approaching many buyers and sellers, who have already agreed sales and have mortgages approved, are unlikely to be able to complete the sale within the deadline.
These transactions are at risk of falling through and chains collapsing, leading to disruption in the housing market and causing economic uncertainty at the time when we hope the wider economy will begin to pick up.
The recommendation from the BSA is a tapered end of the stamp duty holiday, which they say would allow any house purchase where the mortgage approval has been granted by the end of March, an additional three months to complete while still benefiting from the rate reduction.
In addition to supporting homebuyers who are likely to have budgeted based on the stamp duty saving, the BSA say taper will also ensure that lenders and conveyancers are able to manage operational pressures in a COVID-secure way.
Paul Broadhead, head of mortgages and housing at the BSA (pictured), said: “The stamp duty holiday not only enabled a return to a fully functioning housing marketing, it’s likely to have had much wider economic benefits as new homeowners increase their spending on furniture, appliances and ancillary services such as removal companies, cleaners and decorators.
“The Chancellor will also have reaped some reward through the associated VAT payments.
“However, the unprecedented increase in property transactions, which together with the necessary COVID-19 restrictions, have resulted in unexpected delays in completing house purchases.
“Those already in the house buying process anticipate benefiting from the rate reduction and should not penalised because of COVID-related delays in the process that are completely out of their control.
“It would be unfortunate if the positive effects of the Stamp Duty holiday unravelled for the sake of a short extension.
“A three months tapered end, similar to the one announced this week for the Help to Buy: Equity Loan, is therefore a small but necessary change.”