Tom Parkinson, Director and Head of Property at Rowlinsons Solicitors gives us his thoughts on the Stamp Duty holiday.
One thing that is for certain is that the SDLT holiday has vastly increased the number of residential property matters that we are currently dealing with.
On reflection, and looking at our own statistics from the weeks following the initial relaxation of the governments lockdown measures, was such a SDLT holiday required so soon? Maybe not. Would it have been required at some stage though? Perhaps yes.
Regardless the holiday is now coming to an end but where do we go from here?
Looking back to 2009/2010 when the SDLT threshold was returned to £125,000 from £175,000, most of us will remember the huge pressure to complete matters by 31st December 2009 and the copious amount of cases that we were inundated with. The burden was immense, the clients expectations were difficult to manage and the sense of relief at Christmas was welcome to say the least. What followed for us in the New Year was a near 50% reduction in new instructions, completions and ultimately cash flow but in the following months the market did bounce back for those who successfully weathered the storm.
I obviously want to be optimistic that the property market could remain strong or if necessary recover quickly again as it has done in the past, but this time it is different. Come April, not only will SDLT of up to a rather substantial £15,000 be payable again on the majority of transactions (the equivalent rise in January 2010 was up to just £1,750), but we will we still have to contend with the many effects of Coronavirus, higher rates of unemployment, wage cuts, business failures, and job uncertainty, meaning many people are likely to be cautious about making the biggest investment of their lives.
To therefore avoid property sales from falling off a cliff edge, clients having unrealistic expectations and facing potential disappointment, and to prevent all associated with the property industry from a near certain burn out in the run up to Easter, it would seem largely improper to bring the SDLT holiday to an immediate end this time around and alternative options should and can be explored. Yes, the holiday can not be extended forever, but there are options that need to be considered for the sake of the property industry and of course the wider economy. Lessons should be learnt from the past.
Does the Chancellor therefore extend the holiday? Reduce the threshold on which SDLT is payable gradually over time, perhaps to initially bring us in line with the current threshold in Wales? Limit access to the holiday so as to restrict those who can benefit? Make the seller pay the SDLT? Allow SDLT be paid in instalments over time?
Who knows. I for one don’t but you would hope that the Chancellor is listening to the industry and groups like the Law Society, SLC, Conveyancing Association, Bold Legal Group etc. and is planning accordingly. The Chancellor and the wider government have to comprehend the many risks and impact of ending the holiday so suddenly, as if the market does grind to a standstill then the wider knock on effects could be quite severe.