"Stamp duty has long been a controversial tax, but now is the time for reform. The Chancellor should, in our view, make the threshold permanent."
David Hannah, founder and principal consultant of Cornerstone Tax, commented: "This news is big a win for the property industry and home buyers, especially given that without it thousands of purchases could fall through and many will pause their plans to buy houses as our research shows. The approaching end of the stamp duty holiday is already having a profound effect on the property market, sale collapses are approaching record highs and solicitors and conveyancers are already reporting that they expect to see a considerable drop in demand very soon.
"While calls to make the holiday permanent or scrap the tax altogether seem unrealistic given the levels of public debt and the £12 billion tax take it generates each year, this extension will delay the strict cut-off point, but the new date is a temporary fix to the issue."
Iain McKenzie, CEO of The Guild of Property Professionals, said: “Reports that the Chancellor could extend the stamp duty holiday until June would be great news for buyers, sellers and the property market as a whole, if confirmed.
“Hundreds of thousands of transactions have been caught up in the logjam caused by the rapidly approaching deadline and many people face being penalised through no fault of their own.
“While it would be positive to see an extension, an abrupt end to the stamp duty holiday, whenever it happens, could cause harm to the economy and disrupt the property market.
“A gradual phasing out of the scheme would ensure that consumers still waiting to complete aren’t hit in the wallet and would make more sense, as a cliff-edge at any time is an unnecessary threat.
“Considering property transactions are taking longer to complete, if there is no gradual phasing introduced, buyers entering the market now will need to be prepared to pay stamp duty.”
Karen Noye, mortgage expert at Quilter, added: “News in The Times today that the stamp duty holiday is set to be extended in next week’s budget will be music to much of the housing market’s ears. The scheme has done wonders for the property market during this period of economic inactivity, vastly increasing the number of house sales and their prices with it. If this proves to be the case it will no doubt be good news for many, however it does simply kick the can down the road in terms of some of the structural problems in the housing market.
“During the first lockdown, estate agents were closed and the housing market all but ground to a halt. The stamp duty holiday played a fantastic part in reviving the market and getting it motoring again but this artificially increased house prices, making the mammoth task of getting on the housing ladder that much harder for younger generations who were already struggling to find money for a deposit before house prices rose steeply this year.
“It is likely that come June we will see more pressure to keep the stamp duty holiday in play to stop the inevitable house price correction that will come in the future as the economic realities of the pandemic bite. While this news helps to avoid the looming cliff edge for lots of buyers, it does just move it a few miles down the road and many will be in a similar position come June.”
Mark Hayward, chief policy advisor at Propertymark, agreed that extending the holiday until June will "create another cliff edge". He said: "We know from our own research that the majority of estate agents expect to see an increase in the number of failed sales if the stamp duty holiday ends at a cliff edge so we need Government to consider a tapered end to the holiday so that buyers aren’t forced to pull out at the last minute and the property market can continue to thrive.”
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, is also in support of a tapered end to the holiday, stating that otherwise "the cliff edge is just being moved and not removed and we could well see the same problems facing a different group of buyers in three months’ time".
Simon Nosworthy from Osbornes Law added: “The latest estimates are that 70-100,000 home buyers will miss the March 31 deadline and have to be paying stamp duty that they may not have accounted for. This is obviously terrible news for those affected, but extending the holiday would simply mean delaying the pain to a different set of house movers in the future. Yes, a delay now would save all of those would-be house movers the stamp duty fee, but all that does is store up the problem for other people down the line.
“One major problem with the stamp duty holiday is that it has created an artificial bubble that has seen house prices rise by 8.5%. This means that first-time buyers have had to save more to come up with a deposit, when things were already difficult enough to get on the property ladder.
“In addition, there is a real risk that prices, having been artificially inflated, may well go down when the holiday ends. Those who bought during this period may find they have overpaid, potentially negating any saving they made from not paying stamp duty.
“The holiday has reportedly saved house buyers £5 billion, which is unsustainable for the exchequer. While the holiday has fuelled house moves, the property market had already roared back into life after the first lockdown. It is therefore reasonable to believe that the market would still be in decent shape when the holiday ends.”
Mark Arnold, CEO of Kensington Mortgages, believes wider reform of the tax is needed. He said: “Stamp duty has long been a controversial tax, but now is the time for reform. The Chancellor should, in our view, make the threshold permanent. According to our research, keeping the stamp duty at its current threshold of £500,000 could lead to a fiscal surplus for the UK treasury of £139 million a year, generated by higher transaction volumes, increased property prices, household consumption, and housing market activity. It’s the equivalent of 37,000 more property transactions each year. Reform could also lead to greater regional mobility - with ancillary trickle-down benefits – and stimulate downsizing, freeing up family homes and address the UK’s vital stock shortage. Permanent reform seems like a no brainer.”
