Thousands of UK homebuyers could pull the plug on their deals if the stamp duty holiday is not extended, research suggests.
Nearly three quarters (74%) of homebuyers are likely to cancel their planned move if they have to pay stamp duty, according to a survey of over 1,000 people by The Guild of Property Professionals.
Nearly a third (31%) said they would “very likely” cancel their move, while a further 43% said they would “most likely” do the same.
Experts fear that with the property industry unable to process transactions quickly enough, sales still in the pipeline early next year will not have enough time to complete before the stamp duty holiday ends in March.
There are over 140,000 more people in the process of buying a new home now than this time last year and an estimated 418,000 homes sales progressing to completion. However, there are growing concerns over plans for the re-introduction of stamp duty in April 2021.
With the current threshold set at £500,000 and the average house worth £244,5131, many would be set to save in stamp duty.
But under current plans, from April 2021 the threshold returns to £125,000 — leaving those who thought they would benefit from the stamp duty holiday having to find extra cash to complete the move.
Iain McKenzie, CEO of The Guild of Property Professionals is warning the government to take note of the extra time it is taking to complete deals. “If the deadline remains as it is, only a quarter of the sales agreed in January will complete in time,” he said.
With 140,000 more people waiting to complete sales than this time last year, there will be a significant number of buyers who will have to find additional money for stamp duty if they have not budgeted for it.
“Our hope, and the hope of 71% of the public, is that the government extends the stamp duty holiday, or at the very least, introduces a phasing out period that will ease the pressure on all parties involved, and will prevent a cliff edge.”
Nearly two in five (38%) buyers said stamp duty had a big financial impact on the amount they paid, while nearly half (46%) said it had a medium impact on their finances.
The research also found the average value of the property people had bought or were going to buy was £232,500 — meaning the average house buyer would face a stamp duty bill of £2,1502.
With those in the housing market facing an uncertain start to 2021, they are lobbying the government to amend the stamp duty holiday deadline to allow more transactions to be processed. They have warned that the government must act quickly and decisively to avoid the catastrophe of thousands of sales falling through.
And with a third aiming to push through a move quickly to take advantage of the holiday, McKenzie warned many wouldn’t have budgeted for this added cost.
He said: “If buyers are unable to complete as a result of not having the Stamp Duty money in place, we will see a large number of transactions fall through as a result.
“In fact, our research shows [the majority] of those who had moved this year said they would have been likely to cancel or postpone their house move if they had to pay stamp duty, which would’ve been a disaster for the property industry getting back on its feet after lockdown.
“The signs are there, the stamp duty has been successful, but we need to insure a smooth transition back to a normal service.”
The Guild has asked its network of estate agents and potential buyers to use the template on its website to write to their local MPs to push for an extension to the deadline and “help to avoid another setback for the property industry.”
Watch: Martin Roberts explains the new rules surrounding stamp duty