Even though the Budget is now just a few weeks away, you can sense a growing degree of frustration in the industry that there isn’t total clarity around the stamp duty holiday deadline, particularly whether there will be any period of grace for those already in the process but who look increasingly likely they won’t complete before the 31st of March.
The Budget on 3 March may well deliver that clarity and it’s my sincere hope that the government does make dispensation for those in such a position and, for whatever reason and with no fault of their own, are not likely to be completing a transaction by that date.
I’ve heard the current situation, and the ongoing calls for a ‘tapering’ or an ‘extension’, called an industry ‘black hole’ or something that is sucking the life out of the market, and I can’t say I disagree.
While this is ongoing, you can sense the stress levels rising right across the country, and it’s not going to make the lives of those working on these cases any easier during the next few weeks.
If you’re looking to purchase by the end of March and you can see those days slipping away, then understandably you’re going to want information and news on how the case is progressing. Will access to an online case tracker be enough? Or would you rather be on the phone to your adviser, lender, conveyancer, etc, in order to see what stage you’re at?
Ironically, of course, it will be a rise in such calls and communication that could make it even more difficult for these parties to get those cases completed, because you’ll have to put resource into dealing with them, unless you simply decide not to answer them, which I would suggest is not the best route to take.
The whispers around the sector are that the government are considering their options. Certainly, at the recent Parliamentary debate on this, there was no categorical denial that an extension might not be forthcoming, so the industry has hope. Although, having said this, if you were armed with the knowledge that nothing will change, you are able to prepare people for their likely fate.
I sense that the debate has not been helped by some of the requests that have been bandied around, and some confusion about what the best option would be. From my perspective, it seems quite simple, in that you offer those who have already passed a point in the process to be able to complete post-31 March and still have access to the stamp duty savings. This would be my understanding of a ‘taper’.
However, I’ve also seen some voices calling for a six or 12-month extension, which probably only kicks the can down the road and seems highly unlikely, and there appear to be those who want a different kind of ‘taper’. One where the stamp duty charge inches up every month after March, so that for example, purchasers will pay 1% if they complete in April, 2% in May, before stamp duty returns to its pre-July 2020 ‘normality’.
My own view is that such an approach would be overly complicated for one, perhaps delivering more problems than benefits particularly in terms of system changes, etc, but it could also leave the entire industry on very shaky ground with those who complete post-deadline and have to pay money they may not have budgeted for, even it if is less than the normal amount.
If you’re a consumer who had their offer accepted back in November/December last year and yet have found themselves stuck in a chain, or waiting for searches, or impacted by conveyancing firms with staff off via Covid, how is it your fault if your purchase can’t complete until April or May?
Quite frankly, it’s not, and I suspect you are likely to see a raft of legal action being taken by consumers against those in the process who they see as to blame for them not completing pre-deadline, even if those firms clearly outlined that they couldn’t guarantee this outcome.
In my view, it would erode confidence in the housing market, at a time when we need activity to continue beyond the end of March. For example, as the Mortgage Market Alliance recently noted, if you’re first experience of the housing market is either a transaction collapsing because it couldn’t complete pre-deadline, or you having to pay stamp duty when it’s not your fault, then what message does this send and what incentive does it give to re-engage with the housing market in the years to come.
We are an industry that relies on confidence, and one that particularly in this situation, needs certainty and a sense of fair play. No one could deny the incredible challenges we are having to get over at the moment, but for the vast majority of cases it is not the fault of the consumer if a completion can’t happen before the end of March.
The government should be clear that inaction is not the best course of action here. Sticking rigidly to these rules and the current deadline date will be a poor decision to make, especially when we are only talking about those already in the process benefiting, not those who come to it late and expect a completion to happen in a few weeks. Let’s hope the powers that be come to the right decision, because I fear the industry could be open to a raft of litigation if they don’t.
Patrick Bamford is business development director at AmTrust Mortgage & Credit