Fresh calls for Stamp Duty holiday to be extended
By Joanne Atkin -
The government is being urged by many people in the housing industry to extend the Stamp Duty Land Tax (SDLT) holiday beyond 31 March 2021.
The tax relief was brought in to help get the housing market moving again after the Covid lockdown was lifted. Homes bought for less than £500,000 are exempt from paying the tax.
Paresh Raja, CEO of Market Financial Solutions, believes an extension to SDLT is warranted.
“The Stamp Duty holiday has been a great success in stimulating property investment.
While other sectors face hardships, the property market has benefited from a sustained surge in buyer demand for residential real estate.
With the holiday coming to an end on 31 March 2021, we are now facing the opposite problem – the market simply does not have the capacity to meet buyer demand.
Mortgage providers are taking longer to process applications, and the lack of available loans has made findings the right type of finance difficult for prospective buyers.”
The demand for mortgages has surged with the Bank of England releasing figures this morning showing the number of mortgage approvals for house purchase at its highest level since September 2007.
Mortgage approvals rose to 91,500 in September, 24% higher than approvals in February 2020 and up from 85,500 in August.
Approvals in September were around 10 times higher than the trough of 9,300 approvals in May during lockdown.
Raja is concerned there will be a backlog of property sales, which could result in many buyers missing out on the tax relief.
He says this is due to the fact that lenders are simply not able to release the volume of loans needed.
According to Raja, the government has two choices:
“The first is to extend the SDLT holiday beyond the current deadline.
“The second is to put into place arrangements to ensure that buyers who have agreed to a sale prior to the deadline still qualify for the tax relief should the sale occur after 31 March 2021.
Regardless, it is important that mainstream and alternative lenders ensure they are ready and to meet the growing market demand for finance.
This will be vital in supporting the UK’s post-pandemic recovery.”