One of the housing market’s senior analysts says the end of the stamp duty holiday on March 31 would not be the chaotic cliff-edge that some suggest.
Anthony Codling, founder of PropTech platform Twindig and a widely respected analyst formerly at Jefferies investment consultancy, makes his statement in a blog on his website.
He says the housing industry is now split into ‘extenders’ who want the March 31 deadline pushed out, or at least the ending of then holiday to be phased; and then there are ‘enders’ who think that the holiday may have been a bad idea to begin with, and who in any case want it out of the way as scheduled at the end of March.
There is also a third camp - he calls supporters of this ‘exterminators’ - who want stamp duty to be abolished in its entirely anyway. There Daily Telegraph this week launched a campaign which wants the current holiday extended as part of a wider programme to scrap the SDLT completely.
Codling’s analysis comes as the online petition calling for the stamp duty holiday to be extended hits 93,000 signatures - well on its way to the 100,000 mark at which point the government is obliged to consider a debate on the subject.
In what Codling calls his ‘Stamp Duty Holiday Fact Check’, he sets out some interesting facts and figures.
“For a house costing £200,000, the saving is £1,500 and for the average UK house price, which according to Nationwide was £230,920 in December 2020 the Stamp Duty Holiday saving would be £2,120 or less than 1% (0.92%) of the purchase price.
“…The [maximum]£15,000 saving is often the figure which gets the headlines, but for most, the Stamp Duty Holiday saving will be considerably less … We can see that housing transactions are clustered around the £175,000 price point.”
Codling goes on to say that just over 15 per cent of housing transactions occur at or below £125,000 and therefore do not incur stamp duty - they save nothing, whether the holiday ends on March 321 or is extended in some form.
And 50 per cent of transactions are at price points below £235,000 meaning they save less than £2,200 in stamp duty.
“Just under 12 per cent of housing transactions will save the maximum £15,000, which is at most a saving of three per cent of the purchase price. With the saving capped at £15,000 as the purchase price rises above £500,000 the relative saving decreases.”
Codling says that buying a home is much more of an emotional decision than a financial one - buyers will find it hard to walk away, whether they have or have not secured what he claims to be a relatively small SDLT benefit.
“I appreciate that cash is cash, but will 50 per cent of the housing transactions fall through because of a change in costs or sales price of less than £2,200 (a swing of less than one per cent of the house price)”?
He goes on to ask other key questions: “Would those who need to sell cut off their nose to spite the face? Would they rather have no money in the bank than 99 per cent (or at worst 97 per cent) of what they asked for?”
Then he comes to his conclusion - “In our view, the extenders view of chaos and bedlam do not pass the sniff test.”
He concludes by saying that while many would be sympathetic to the ‘scrap all stamp duty’ campaign - “raise your hand if you would like to pay less tax” - Codling believes that a government faced with recovering from Coronavirus needs to get tax somehow…so why not SDLT?
He puts it this way: “Should we not be pulling together with those of us who can pay helping out those who can’t, those who have been hit hardest by the full economic force of the Covid pandemic and don’t have the luxury of choice of moving home?”
You can see his full blog here, complete with graphs.
/_Kwasi%20Kwarteng_400x310.png)
.png)
.jpg){kind=logo}
.png)
Join the conversation
Jump to latest comment and add your reply
I think one of the main issues facing us as a law firm is how logistically to complete around 150 transactions in the last (say) five working days in March which is when everyone will want to do it.
Removals is the other big issue - there are not enough removals companies capable of handling the volume of completions by the time we get to March - even pre Christmas most were solidly booked and having to defer as many as they could into the new year because they physically could not even manage the pre Christmas rush (which will be dwarfed by the volume in March by a huge margin)
What about the families that have 2 home workers and 2 home schoolers in a small flat, marriage breakups that can’t move on and are still living under the same roof sometimes suffering domestic violence, families needing to move to get there children into the right schools....moving is one of the most stressful things losing up to £15k will cause chains to fall apart......i love analysts who have no real idea of the real world and peoples real concerns. The resolution is simple, completed chains instructed before the 31/3 get the holiday despite when they complete, sales after the 31/3 dont.
I believe that the biggest concern is just how many sales were set up and agreed with a fairly laissez faire attitude towards how realistic the timeframe was to be. Putting a SSTC board up and leaving client expectation management down to the legal profession. I know that many estate agents will be saying, "it wasn't our fault it was the conveyancer that let you down" when if they take a step back they will realise just how much they failed to do for their clients to actually hit targets....and I don't mean shout at conveyancers louder or more frequently.
Only doing viewings with buyers that can prove they can afford or get their finance with a lender, ensuring that vendors have completed as much of the legal paperwork at the point of going to the market as possible and using marketing time to amass relevant paperwork for the conveyancer (all of which is left until post sstc usually), get searches underway at the earliest opportunity and NOT rely on the conveyancer to do it for the client (as that loses at least 6 weeks on average), ensure that an appropriate ID/AML report is attained for the client at the start of the relationship so that the exercise did not have to be repeated 3 or 4 times during the transaction and working in 'collaboration' with the legal profession rather than against it.
The brightest or most amenable to change estate agency businesses will learn lessons and adapt their processes to help improve the property market in England and Wales, the rest will eventually become visibly out dated, unsupportive and archaic in the eyes of the home mover.
Which are you?
Of course it will matter - it's showing already - people hate paying HMRC anything, so even a saving of £1000 matters
I happen to agree about the conclusion that ending the SDLT holiday will damage the market majorly, especially in the medium to long term. The compelling argument against cliff=edge-end to the SDLT holiday is to do with the chaotic and disorderly end that is about to occur, exacerbated by the current lockdown.
For me, the tapered re-introduction is the favoured option, even on 1 April. This would ease the financial stress in transactions that don't make it over the line before the deadline.
If stakeholders were simply concerned with a few thousand transactions not making the deadline as supply chains were unexpectedly overloaded, they would be arguing for a 1 or 2 month conditional extension for certain transactions, not a new free for all until 30 September.
If granted, give it until June before the same copy and pasted letter warns about a new dawning cliff edge in September for all the new deals that have been agreed in the meantime, capitalising on the first extension, which was of course the intention all along. Whatever the end dates, these holidays need either to be less generous, so the cliff becomes more of a ledge, or they need to be tapered over a 2 -3 month period like a gentle incline.
Please login to comment