The stamp duty holiday extension has led to a substantial rise in demand. With property transactions taking longer, will professionals in the UK property market be able to keep up?
On 3rd March 2021, Chancellor Rishi Sunak announced the stamp duty holiday extension in the Spring Budget. Ever since, the property market has been gaining momentum with demand hitting record levels. Supply has struggled to keep up with the ever growing demand.
The stamp duty holiday first came into effect in July 2020 and led to a surge in demand and property transactions. This has caused house prices to increase dramatically in recent months, despite the challenging landscape surrounding the COVID-19 pandemic.
Originally set to end on 30th March 2021, the stamp duty holiday is now in place until 30th June for properties up to the value of £500,000. A tapering period will then come into place from 1st July to 30th September with the nil-rate band set for properties up to the value of £250,000. From 1st October, the stamp duty threshold will then drop back down to the normal rate of £125,000.
Property transaction speeds
With property market activity at such busy levels, property transactions are taking much longer than usual. The risk of property sales not completing by the extended stamp duty holiday deadline is increasing.
Property portal OneDome surveyed 5,000 UK estate agents on what issues they face in completing property transactions. Of those surveyed, 74% ranked “lack of speed of the transaction” as the biggest problem in transactions. Lack of control came in second with 40% of respondents.
Research commissioned by the Department of Business, Energy and Industrial Strategy also showed 57% of sellers and 59% of buyers found the buying and selling process took longer than they expected. Unsurprisingly, the most common area identified that could be improved in the homebuying process is the speed of the service.
An industry under pressure
The stamp duty extension provided welcome reprieve to the UK property market. Many professionals in the property industry, especially lenders, conveyancers and surveyors, had been under significant pressure.
With the growing demand, the industry is struggling to keep up again. Conveyancing firms are especially feeling the strain. The sector is facing pressure to progress and complete transactions before the end of the stamp duty holiday.
There is even a new petition calling for the stamp duty holiday to be triggered upon exchange of contracts instead of at completion. When contracts are exchanged, the sale becomes legally binding. This would predominately help those buying new-builds in particular as there have been some housebuilding delays due to the COVID-19 pandemic.
The petition states: “People are finding themselves becoming trapped in a scenario whereby house prices are much higher, and at the same time they will now miss out on the stamp duty holiday. People are being financially punished from both sides, this from a policy that was designed to do the exact opposite.”
In 24 hours, the online petition racked up over 1,700 signatures. It’s expected to be popular among homebuyers, sellers, conveyancers, lenders and surveyors. If the petition receives more than 10,000 signatures, the government will respond. And if it gets more than 100,000 signatures, it will be considered for a debate in parliament.