Industry experts are asking for the stamp duty holiday to be extended, amid fears the deadline could see the property market face a “cliff-edge”. This year, the property market has experienced a boom despite the market coming to a halt earlier this year due to the coronavirus pandemic. On Saturday, it was confirmed that parts of England, including London, would be put into Tier 4. The new measures were put in place after a highly transmissible strain of coronavirus was discovered to be spreading across England.
“Just a few days ago Boris Johnson was saying to cancel Christmas would be ‘inhuman’ and yet Christmas, for millions, was cancelled overnight.
“The Housing Secretary, Robert Jenrick, has confirmed the sales and rental markets, and all associated markets in Tier 4 areas remain open, but in the eyes of a growing number of prospective buyers and sellers there’s a risk they’re starting to feel shut.
“The furlough goalposts have been moved time and again so why not the looming stamp duty deadline, which risks creating a cliff-edge market?”
New research commissioned by Kensington Mortgages has also found that extending the stamp duty holiday could be positive for the UK Treasury.
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According to the mortgage provider, approximately 37,000 more property transactions would take place each year.
Currently, buyers purchasing property for £500,000 or less do not need to pay stamp duty.
This makes up nearly 90 percent of transactions in England and Northern Ireland.
If this is kept in place, there would be new tax revenues generated by higher transaction volumes, increased property prices, household consumption, and housing market activity which could range between £2.3 and £4.1billion.
According to analysis by the Centre for Economics and Business Research (CEBR), in the upper bound estimate this would lead to a fiscal surplus of £139million.
The latest findings also suggest that if the holiday is kept in place, house prices would be 1.3 percent higher on average.
CEO of Kensington Mortgages Mark Arnold said the SDLT holiday has been positive for the economy this year despite various hurdles.
He continued: “The threshold level should be considered ripe for permanent reform.
“The upper bound estimates of our analysis suggest that the Treasury could have its cake and eat it, achieving a fiscal surplus whilst boosting the economy.
“It could unlock housing market activity and pay for 4,000 additional nurses in one fell swoop.”
Mr Arnold said maintaining the threshold could also address “structural problems” with the current UK housing market which includes freeing up family homes and the shortage in property.
He added: “Furthermore, aside from updating the threshold to reflect real world house prices, the maintenance of the £500,000 threshold could address some structural problems with the UK housing market.
“It could lead to greater regional mobility – with ancillary trickle-down benefits – as well as also stimulate more downsizing, freeing up family homes and helping to address this vital stock shortage.
“We believe now is the time to be bold and keep the threshold at its current position, or at least consider amending it to a higher level than the previous £125,000.”