There appears to be a lot of wailing and gnashing of teeth amongst a number of housing market commentators that the Chancellor, Rishi Sunak, didn’t use his recent Spending Review to also announce an extension to the stamp duty holiday deadline.
Given the news Sunak was imparting about the fall in GDP, the level of borrowing and the potential damage we might expect to the UK economy as a result, plus the freezing of many public sector workers’ pay levels, I’m not sure that this would have been a good time to announce further ‘tax incentives’ (which is how some politicians and press would label it) those purchasing a home.
The optics of that would have been ‘spun’ negatively, even with announcements of a new £7.1 billion housing fund for building more properties adding to the relatively new Affordable Home fund, and the so-called ‘Levelling Up’ fund that is to be available to local councils.
However, this of course is not to say that the much called for extension to the stamp duty holiday won’t materialise at some point in the future. From what I gather there have been a steady stream of housing market bodies and representatives into the Treasury in recent weeks – in a virtual sense of course – to make the case for an extension and to highlight the large numbers of transactions currently working their way through the process with no guarantee they might complete by the end of next March.
I read recently that Treasury staff have been in ‘listening mode’ but perhaps given the priority that has needed to be given to the Spending Review in recent weeks, and the ongoing extension of support including the furlough scheme, and the like, they have probably believed (perhaps quite rightly) that there were bigger fish to fry, and problems to solve.
That said, this is not an issue that is going to go away anytime soon, not least because the closer we get to the deadline, the more stressed all participants in a transaction are likely to become.
The recent announcement of the post-lockdown tier system reveals little change in terms of working practices or indeed, working locales, with pretty much every single stakeholder still being asked to work remotely where possible. Even with a huge effort in place in order to get as close to ‘business as usual’, the likelihood is that many practitioners will be dealing with record levels of business at an operational capacity some way off where they would like to be.
Of course, cases can be worked through the system, but it’s not difficult to sense the pressure that conveyancing firms, for example, are under especially when it comes to search requirements, or indeed getting the information they require to proceed a case from various disparate sources – who themselves having the same operational/resource/employee issues that we are all dealing with.
In other words, the arguments being made for an extension become ever more compelling, especially when you weigh up the benefits that increased levels of housing transactions can deliver for the economy and UK plc as a whole. A stamp duty holiday was introduced to produce just that, and the government might well feel that it won’t have truly reached its potential unless it can get as many as possible of those transactions through to completion.
So, while many in the industry might feel that Sunak missed an opportunity with the Spending Review, it may well be that the opportunity is still being weighed up to be ‘reviewed’ at a more convenient and appropriate time. Again, the rumour mill suggests we are unlikely to hear anything on this before 2021, but it doesn’t suggest that we won’t hear anything about it at all.
Overall, and in light of the figures Sunak did announce, the economy is likely to need the significant boost that high levels of housing market transactions can supply for many months and years to come. In that respect, the government may feel it has no option but to continue supporting taxation measures that can help deliver this. I suspect few in our sector would wail and gnash our teeth if that was the outcome we get.
Bob Young is CEO of Fleet Mortgages