The stamp duty holiday has been one of the few positives for our sector since the lockdown. Yet, allied to the pent-up demand, it could now be argued that its introduction has been too successful.
Jeremy Wood is chief executive of Dudley Building Society
The stamp duty holiday has been one of the few positives for our sector since the lockdown. Yet, allied to the pent-up demand, it could now be argued that its introduction has been too successful.
While intermediaries have benefitted hugely from the uptick in new mortgage business, it has become clear that providers, all of whom are still adjusting to a post lockdown world, are now reaching a point where service is falling down as a result of this rush to purchase.
As other commentators have already noted, although the stamp duty holiday does not finish until the end of March, it is already likely that many buyers, particularly those still looking, will not be able to complete by the deadline.
Is it up to mortgage brokers to sound a note of warning to new customers that although there are still nearly five months to go, they do run the risk of failing to complete and then having to pay stamp duty. Whilst I believe that most advisers will be aware of the potential dangers to their clients, no one wants to make the wrong call.
However, while the purchase stampede is a matter for the industry to handle, the predicted bottleneck to beat the deadline is down to the terms of engagement attached to the holiday period and is within the Treasury’s power to alter.
Putting a hard deadline in place must have seemed like a good idea at the time, and while no one could have predicted such a sales boom, government must now recognise that it risks causing unnecessary damage to the hopes of many, as well as to the morale of all of us, by maintaining the deadline in its current form.
While the deadline could be extended, which would only kick the can a little further down the road, surely a more sensible option and one which would maintain more control over the cost to the Treasury, would be to honour the 31 March deadline for those with formal mortgage offers in place. While pressure on lenders to produce offers would still be there, it would allow the conveyancing part of the process the time it needs to deal with title issues and relieve overworked local authorities trying to meet the demand for local searches.
Flexibility is required and it is within the chancellor’s gift to listen to the industry and act to help alleviate the situation. Alternatively, he might decide that this is the right time to retire stamp duty on property purchase altogether. At a time when we need a demonstration of sensible government direct action, it would not only be good business but also good politics.
