Property industry leaders have now sent a joint letter to the chancellor in what they see as an important step in protecting those in the process of buying or selling a residential property that might miss out on the 31 March stamp duty deadline because of increased pressure on service providers within the industry which is causing delays for buyers and sellers in the sector.
It was widely reported yesterday morning that the joint letter, signed by 14 trade bodies and property firms, had already been sent to the chancellor requesting that he extend the current stamp duty holiday, but there was an unexpected delay.
The joint letter was signed by The Guild of Property Professionals, NAEA Propertymark, the Residential Property Surveyors Association, BAR, Conveyancing Association, Society of Licenced Conveyancers, the House Buying and Selling Group, Simplify, Purplebricks, Mortgage Advice Bureau, and Landmark.
“The group endorsing this letter represents the breadth of the home moving process including estate agents, search agents, mortgage intermediaries, conveyancing, surveying, energy assessors and removal companies,” said Mark Hayward chief executive of NAEA Propertymark.
Hayward, like the other industry leaders that signed the letter, fears that a “stamp duty cliff edge on the 31st March” could lead to a sharp decline in property sales “at the final hurdle”, which would undoubtedly have an adverse impact on the housing market.
He added: “We are calling on government to rethink these timings, so pressure on the system can be released to allow transactions to complete and avoid a disorderly and distressing period for movers and businesses throughout the market.”
You can read the letter in full below.
Rt Hon Rishi Sunak MP
Chancellor of the Exchequer
HM Treasury
1 Horse Guards Road
London
SW1A 2HQ
Dear Chancellor,
We are writing to you with regards to our concerns about significant consumer detriment that we believe will occur next year without intervention from Government, specifically extending the Stamp Duty holiday.
Collectively we represent the home moving process: estate agency, search agents, mortgage intermediaries, conveyancing, surveying, energy assessors and removal companies.
In May 2020, the UK housing market emerged from lockdown re-energised by certainty that the UK would be leaving the European Union and pent up demand following two months of lockdown. There was consumer demand to move to different types of property in addition to the delayed chains in the pipeline in March. This demand was bolstered by the temporary reduction of Stamp Duty Land Tax (SDLT) and the termination of the existing Help to Buy scheme – both with deadlines of 31st March 2021. Despite two months of lockdown, property transaction levels have now accelerated and overall 2020 volumes are expected to end the year higher than last year.
We are concerned that the home buying and selling industry does not have sufficient capacity to deal with this surge in demand caused by the need for completions to be concentrated into a limited window. Movers will apply pressure to complete transactions by 31st March in order to benefit from the changes to SDLT and to meet the Help to Buy requirements. Failure to complete those transactions could see the breakdown of chains with consumers potentially financially unable to continue with the purchase, as they would have to find funds to pay Stamp Duty.
Operational constraints in all areas of the home buying industry caused by the disruption brought about by Covid-19 and the current advice to work at home where possible, have seen average property transaction times lengthen from 12 weeks to 20 weeks. We are concerned that consumers continue to offer on properties expecting to benefit from the SDLT rate reduction but in reality they may be too late.
We believe urgent action is required, and are calling on the government to:
- Announce an extension of the Stamp Duty holiday of at least 6 months before Christmas in order to reduce the risk to the consumer.
- Work with the industry to develop a method to help smooth the end of an extended Stamp Duty holiday to prevent another cliff edge.
By acting now, the government can release the pressure in the system to allow transactions to complete and avoid a disorderly and distressing period for movers and businesses throughout the market. Any extension or gradual phasing of the SDLT would also help mitigate sharp reductions in consumer demand. More widely, a buoyant housing market drives consumer confidence in the wider economy whereas constrictions on lending and falling house prices lead to reduced consumer confidence and a material reduction in economic activity.
Our organisations are ready to work constructively with the government to avert these risks in a timely manner and help people to move home as they grow their families, start new jobs and manage changes in their lives. We look forward to working with you and your officials to achieve this.
Yours sincerely,
Comments (3)
We as agents do know how to ‘bleat’. In May of this year when the lock-down was eased we saw an encouraging level of activity, probably more than most of us could have expected or hoped for, as the general opinion at that time was 2020 would be a total disaster. We then got the unexpected bonus of the Chancellor providing a Stamp Duty holiday – another piece of hasty handout to stimulate the economy which perhaps on hindsight they probably regret, when they see the loss in revenue from so many transactions.
What we agents didn’t expect, as we gleefully arranged yet another sale, was that our legal brethren, local authorities and ancillary trades were not geared to cope with the volume of business and what had already become a tawdry property transfer process prior to Covid has become an embarrassing disaster.
Asking the Chancellor to extend the deadline to avoid the ‘cliff-edge’ situation would seem irrelevant because ‘cliff-edge’ situations have been the story of our lives over many years, with the historic loss of MIRAS and other Capital Tax deadlines which inevitably cause elements of ‘boom and bust’ and in some respects with the Government desperate for income to replace the many handouts who could blame him if he ignored the request..
As “kevsav53” suggests a very long overdue examination of our conveyancing process may at least be forced upon us – but I am not holding my breath because the legal elements may still take longer to fully embrace the technology required to improve matters and unlike us, they may still be able to recoup some costs from any abortive sale.
Most buyers and sellers have no idea of how long transactions take and still believe things can happen in a couple of months. Our task now is to try and manage buyer and sellers expectations on moving times to try and soften the blow of not achieving a completed sale by 31st March and the loss of the Stamp Duty ‘saving’ and look at potential ways of re-negotiating a sale to compensate for the loss. After all, within the scheme of things, the saving is not that great, as the based on the UK national average house price of £240K it’s £2,300 and at £4-500K is £10/15,000. Experienced agents should hopefully have some idea of how to salvage the situation but sadly we must not lose sight of the fact that the whole matter could be out of our hands if the unemployment and economy ‘falls of a cliff’ in 2021.
Happy days keep plugging away boys and girls our industry is all about ups and downs – if it were that easy anyone could become an Estate Agent.!
Speaking as a conveyancer when there was a huge headline about this letter yesterday I was expecting something dramatic and lengthy giving reasons for delays and, more importantly. suggesting some answers. When I tried to make the point yesterday I didn’t really think it would make a lot of difference I was abused by a man who claims to represent many conveyancers in the profession, and therefore should know better, but by his actions basically I thought proved the point I was making.
Now I think it was all fuss over nothing. It’s a letter and I doubt it will hold much sway even if actaully reached Rishi’s desk.
Having been insulted yesterday for making extremely valid points about my colleagues in the conveyancing profession, which clearly people who claim to know better are willing to overlook and doing nothing to correct, I once again say we need to keep our heads down and work. It is open season for criticising conveyancers at the moment. In many cases rightly so. But those of us who do our job properly and put our clients first are busy giving a good service in difficult circumstances. It would be better if we were supported rather than abused by people with selective memory loss themselves.
This is brilliant-the majority of the property industry is a shambles, full of delays, inefficiencies, lack of investment in talent and technology and poor leadership and it is now looking for someone else to blame for their own legacy mess. Even when Rishi Sunak hands it a golden opportunity by way of a stamp duty holiday, then because of its own shortcomings and lack of foresight, the property industry writes to Sunak asking for an extension because they’re so shambolic! If i was Sunak, my reply would be a simple 1 liner- ‘Get your house in order, embrace technology, move into the 21st century, dry your eyes and get on with it.’ The same thing will happen again if Sunak extends and an extension doesn’t address the real underlying problem. Take some responsibility and start making changes now! Have any of these signatories even considered that those who have had the foresight to plan, work with sufficient staff numbers and embraced technology may not struggle to get their clients in ahead of 31st March 2021 and will rise to the top?