Yorkshire Building Society is calling for the introduction of a stamp duty taper at the end of the temporary stamp duty freeze in March 2021 so buyers can avoid being hit by an unexpected tax bill.
Using 2019 analysis on the percentage of sales agreed from October to March which completed by end March, and 2019 Bank of England mortgage approval data, the society has estimated there could be 239,964 sales which were agreed by the deadline but would not complete in time.
It supports the introduction of a stamp duty taper which would allow any agreed property purchases which have had a mortgage approval granted by 31 March until 30 June 2021 to complete their sales with the benefit of the temporary stamp duty reduction. New mortgage commitments approved after 31 March would not benefit from the reduced rates.
Without a taper, the society said the hard stop could cause some buyers to be left with a bill of £2,400 on an average priced home, rising to £15,000 on properties worth £500,000.
Nitesh Patel, strategic economist at Yorkshire Building Society, said: “The stamp duty holiday is coming to a dead halt on 31 March, 2021 which may not give enough time to for buyers and sellers with agreed sales and mortgage approvals to complete.
“This may cause issues for homebuyers who may need to find thousands of pounds for an unexpected tax bill. It could even cause some transactions to fall through.
“We therefore would like to see a stamp duty taper, which would give a three-month grace period to sales which are already agreed with a mortgage in place.
“This is also very likely to be an extraordinarily busy period for mortgage lenders and other professionals in the house-buying industry. Social distancing is likely to remain in place for businesses until the deadline so allowing an extra three months to help for buyers who have mortgages approved and sales would be a sensible solution.”