To avoid home buyers being caught in a “completion trap” the Chancellor is considering a six-week extension to the stamp duty holiday.
If the stamp duty holiday ends when it is due to, there is a risk that there will be a lot of people caught in a completion trap. The Chancellor is said to be considering a limited extension through to mid-May with an aim to allow time for purchases already in progress to complete.
Conveyancers have said that there is no guarantee that purchases will complete in time for the March deadline. Lenders have warned that the rush to reach the deadline could impact service levels for new business.
A virtual House of Commons debate two weeks ago saw MPs show cross-party support for changes to the stamp duty holiday proposed end date. Considering the option of a phased withdrawal of the deadline, which would help support borrowers in the process.
Miles Robinson, head of mortgages at Trussle, commented: “The news that the Chancellor of the Exchequer, Rishi Sunak, is considering a six-week extension to the stamp duty holiday offers a glimmer of hope to buyers racing to beat the current deadline of 31st March.
“The stamp duty holiday has caused unprecedented demand within the market. At Trussle, we saw a 63% increase in mortgage applications in December and a 15% increase in January, when comparing the same periods year-on year. However, the surge in demand has triggered long delays in the processing of transactions. It currently takes 134 days to complete on a property in the UK and it’s been reported that one in five buyers are facing more than a six-month wait for completion. Therefore, a potential six-week extension could prove invaluable to the estimated 100,000 property purchases currently underway.
“However, there will be many who are yet to begin their home ownership journey but still hoping to benefit from the tax relief. For these people, the proposed extension won’t be long enough. Whilst their mortgages might be approved before the deadline, the current wait time for other necessary processes, such as surveys, valuations and local searches are likely to take longer. In fact, local searches are now experiencing wait times up to 200 times longer in some areas than normal. We’d encourage all buyers hoping to complete before the end of March to use a Stamp Duty calculator to factor in potential stamp duty fees to avoid any unexpected costs should their sale not complete in time.
“As the wider economy continues to recover from the coronavirus pandemic, we’d urge the Government to consider granting a longer extension or adopting a tapered approach to ending the stamp duty holiday.”