The Stamp Duty Holiday was implemented by the Chancellor Rishi Sunak as a way of offering a financial helping hand amid the COVID-19 pandemic. Usually, the Stamp Duty Land Tax (SDLT) is applicable in England and Northern Ireland, and must be paid on property or land which is over a particular price. To alleviate a financial challenge for homebuyers, Mr Sunak has set the threshold at £500,000, but only until March 31, 2021.
However, with demand rapidly increasing, and the wait for mortgage approval lengthening, there are fears many could miss out, including those who are already in the process of buying a home.
The Intermediary Mortgage Lenders Association (IMLA) and The Association of Mortgage Intermediaries (AMI), have issued a joint warning to buyers who are hoping to complete by the all-important March 31 deadline.
The organisations have urged Britons to consider the possibility they could miss out, and take this into consideration, as it could potentially cost buyers thousands of pounds.
People who have not factored this in could have to withdraw from their home purchase, but this could have a domino effect, and cause chains to collapse – creating further chaos.
“We are concerned, as we approach the Stamp Duty Holiday deadline, that borrowers need to be realistic about what will happen if they miss the March 31 cut-off date.
“Those who do miss it, will need to be aware of how much Stamp Duty they may be liable to pay – and have a plan for finding that cash.
“If they can’t, there is a risk that their sale may fall through, taking with it a number of other transactions if there is a chain.
“We want to avoid borrowers losing out, through no fault of their own, and have called for some flexibility to the deadline which would ease the immediate pressure on lenders and conveyancers, and treat borrowers whose cases are already in the pipeline more fairly.
“One way of doing this would be to taper the withdrawal of the tax exemption rather than apply a hard stop on March 31.”
Ms Davies said that while lenders, intermediaries and conveyancers will endeavour to be upfront with homebuyers, some responsibility lies with Britons looking to take advantage of the holiday.
Borrowers should plan ahead to ensure they have all of the necessary funds in place ready for their purchase.
They should also have any relevant documents prepared to make sure the sale goes through smoothly.
This may involve speaking to a mortgage adviser or broker to provide further insight into the matter.
Robert Sinclair, Chief Executive of the AMI, also spoke about the cliff edge facing homebuyers.
He said: “As the main contact point for the consumer at the sharp end of this, brokers will work hard to keep the consumer informed and warn them of the potential risks they face.
“I would like all lenders, brokers and conveyancers to assess their pipelines and operational capacity between now and the end of March and give a realistic assessment to their customers of the likely outcomes.
“By working together now, we can minimise disappointment.
“However, I firmly believe with what is already in the legal process, government needs to stand ready to extend the deadline to avoid there being thousands of frustrated and disappointed taxpayers.”