Collapses in agreed house sales have reached record highs as the deadline for the temporary suspension to Stamp Duty Land Tax (SDLT) approaches, according to Cornerstone Tax.
The tax advisory firm suggested that “major delays and a turbulent economic climate” as a result of the coronavirus pandemic have posed problems for homebuyers, with over a quarter of house sales now falling through.
Recent figures from Rightmove revealed that the percentage of agreed house sales that collapsed increased from 17% in July 2020 to 28% in December.
However, with the deadline for the stamp duty holiday approaching, Cornerstone said that buyers are under “more pressure than ever” to complete their deals before 31 March.
Cornerstone principle consultant and founder, David Hannah, suggested a tight stamp duty holiday deadline is putting the housing market under intense pressure.
“These statistics are shocking, if not wholly surprising, when you consider how many people are trying to take advantage of a scheme that is rapidly approaching its end,” Hannah commented.
“This kind of hard deadline was bound to lead to this kind of bottle neck and demand is sure to fall considerably when it passes. In any market, consistency and certainty is key to overall stability and growth.
“Growth so far has come from artificially inflated demand but does not look long-term.
Now with the end of the stamp duty holiday imminent, homebuyers across the country are desperate to complete the conveyancing process, lest they pay thousands more for their new properties. This has resulted in a logistical nightmare for the housing market, and will likely result in many more deals falling through.”
Cornerstone, along with several commentators, has already called for the government to extend the stamp duty holiday.
The tax firm said the logistical strain placed on the housing market has created a bottleneck – resulting in the conveyancing process being dramatically extended – and that a stamp duty extension would alleviate pressure on the market to give homebuyers the time and security needed to complete purchases.
“A cliff edge end to the stamp duty holiday is simply inviting a catastrophe, as buyers and sellers alike will realise they will likely miss the deadline and withdraw from the deal,” Hannah added. “Not only this, but many buyers will miss out on the deadline and will then simply be unable to afford a move.”
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