"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."
The Government announced a temporary stamp duty freeze on property purchases up to £500,000 in July, which is set to come to a hard stop on 31st March. As it stands, to benefit from the tax reprieve, buyers must have completed their sale by the deadline.
Using 2019 analysis on the percentage of sales agreed from October to March which completed by the end of March, and 2019 Bank of England mortgage approval data, the Society has estimated there could be 239,964 sales which have been agreed by the deadline, but are yet to complete.
The Society is supporting the introduction of a stamp duty taper, which would allow any agreed property purchases which have had a mortgage approval granted by 31st March until 30th June 2021 to complete their sales with the benefit of the temporary stamp duty reduction. New mortgage commitments approved after 31st March would not benefit from the reduced rates.
The Society estimates that buyers could be left with a bill of £2,400 on an average priced home, rising to £15,000 on properties worth £500,000.
Based on the average house price of £245,000, these transactions are collectively worth an estimated £58bn.
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 home-buyers, 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, allowing an extra three months to help for buyers who have mortgages approved and sales would be a sensible solution.”
