Three-month stamp duty holiday extension ‘needs conditions’, says Sheffield estate agent: ‘We're just moving the cliff edge further along’
Extending the stamp duty holiday until the end of June risks worsening problems caused by a booming property market, according to a Sheffield estate agent who warns the tax cut has forced prices up ‘too high’.
The threshold for paying stamp duty land tax on property purchases has been raised from £125,000 to £500,000 in England and Northern Ireland since last July.
The measure – introduced to stimulate the housing market after the first national lockdown, when moving home was discouraged – was due to end on March 31, but according to The Times the Chancellor, Rishi Sunak, is expected to move the deadline until late June.
Property website Rightmove has said that the extension could benefit another 300,000 house sales in England, saving buyers £1.75 billion in tax, with 80 per cent of those sales paying no stamp duty whatsoever.
But Nicola Spencer, managing director of Sheffield estate agent Spencer, said it would merely ‘kick the can further down the road and mean people are still under pressure for slightly longer’.
"It's a little bit short-sighted,” she said.
"Conveyancers are already at breaking point. They've got themselves particularly frazzled and have been seeing the end of March as a bit of respite.”
Nicola said that, until the extension was mooted, any deal agreed after January 1 was deemed unlikely to be eligible for the tax saving.
"What we're now saying is everybody that's purchased in January and February are likely to be able to, hopefully, take advantage. But we're then going to get people buying in March and April who also think they might be able to get the saving. If they were saying anybody who purchased a property in 2020 automatically got the benefit, if they could prove it via their lawyer, that would be a much more sensible way of looking at it.”
She said there were ‘massive backlogs’ of surveys and difficulties booking mortgage valuations. “It'll carry on being ridiculous – we're just moving the cliff edge further along. They should have had some conditions attached to it.”
The tax holiday was probably ‘making a difference on some properties somewhere, but not necessarily in Sheffield’, said Nicola.
“Sheffield has quite a buoyant market most of the time anyway. Here all we've done is force some prices up – some, I think, too high. We've ended up with people paying way over the odds for stuff because they'd rather somebody had the money than the taxman. There will be people then wondering about selling in negative equity, surveyors downvaluing properties... there's way more than one problem being created.”
She added: “We're finding a lot of people have bid quite high to get a property – obviously what they're going to do if they don't get the saving is suddenly ask for that money back somehow. There'll either be a downvaluation from the mortgage lenders, or people will pull out of deals or renegotiate on prices.”
And the Government will need to think of ways to ‘claw back’ the money it has spent on economic schemes during the pandemic, Nicola believes.
“We're all sitting with bated breath wondering what on earth they're going to do that will affect our businesses.”