Government misses a trick on stamp duty
Comments on the Budget from Rob Clifford, CEO of Stonebridge Group:
“The news about the stamp duty extension was widely trailed in the media last week, and therefore this three-month extension is not a surprise but a welcome and sensible intervention. Clearly, it will help some purchasers continue with their SDLT-free transaction, who might ordinarily have struggled to comply with the 31st March deadline. There is a risk that that this might act as the catalyst for a further spike in new purchases case which now attempt to complete before this new deadline, which the market needs to consider.
“Let’s not forget that a short-lived Stamp Duty holiday isn’t the solution. The Government missed a trick today when they could have brought about a permanent resolution – by accepting the compelling economic arguments that suggests it’s an outdated tax and its removal would consequently lift transactions and thereby deliver far more taxation upside to the Treasury’s coffers than the SDLT system does today. This would also have taken some of the pressure off solicitors, advisers, lenders and clients, which the holiday approach perpetuates. Whilst we naturally welcome a busy market, we still appear in danger of having thousands of transactions not completing before this new deadline, which will hurt consumers, and exacerbates the risk of aborted sales, at great cost to both consumers and the wider economy.
“Another major announcement for the housing market is the guarantee scheme which may run in a similar vein to the Help to Buy guarantee scheme offered under the David Cameron/George Osborne Government. Undoubtedly, anything that helps boost the number of low-deposit mortgages in the market is going to be helpful and is welcome, because lenders have understandably retreated from this space over the last 12 months. The Help to Buy version did boost availability of high LTV mortgages and we would anticipate this will do the same, given that it should generate more competition and deliver more consumer choice; it may also increase products from those lenders who don’t participate in the formal scheme but decide to utilise private mortgage insurance to facilitate these loans. Supply of affordable homes to the market remains key – without greater supply at the right price, even with the return of 95% mortgages, many would-be first-time buyers will still find home ownership elusive. The most significant obstacles for first-time buyers remain both the deposit and headline purchase price itself.”
Published: 03 March 2021