Groundsure CEO responds to Budget SDLT announcement
Today the Chancellor announced the 2021 budget, including decisions on Stamp Duty Land Tax (SDLT). The 0% rate holiday on properties worth up to £500,000 has been extended until the 30th June - with a tapered return to pre-COVID19 SDLT rates by the 30th September: The nil rate band will fall to £250,000 from July until the end of September, before returning to the £125,000 threshold on 1st October 2021.
Chancellor Rishi Sunak presented the 2021 Budget today.
The government also announced, as predicted, that 95% mortgages will be guaranteed by the government as part of government plans to transform “generation rent to generation buy”.
We asked our CEO Dan Montagnani about his thoughts on Mr Sunak's announcements and what impact this may have on the property market:
“In 2020 we experienced a real rollercoaster ride in terms of property transactions. Whilst we enjoyed these highs, the lows were not so great, and the peaks and troughs are really not that good for the industry as a whole. More importantly, this variability does not best serve home buyers. Peaks mean delays to homemoving as the conveyancing industry has to deal with surges in demand and inevitable bottlenecks arise. We have recently seen the time taken to transact a property from Sale Agreed to Completion extend from around 14 weeks to something like 21 weeks. The Stamp Duty Land Tax holiday was a partial driver for the high demand through H2 2020 and early 2021. Whilst this intervention was well intentioned by the Government it is questionable as to whether it was entirely necessary. A longer-term trend towards higher transaction volumes (on a par with long term norms pre Global Financial Crisis) as well an additional proportion of transactions driven by the Covid19 situation itself, were probably enough to maintain a reasonably good market through the second half of last year.
The inevitable consequence of a tax holiday is what happens at the end of it? The movement of the cliff edge now to later in the year whilst useful specifically for those in the middle of the sale process, just moves the problem further down the road. Therefore the announcement from the Chancellor today that the SDLT holiday deadline will move to 30th June alongside some effective subsequent tapering of the rate, is very welcome. Along with the Mortgage Guarantee Scheme helping buyers with smaller deposits - these are welcome announcements that will help support the property market through 2021.
Longer term I think there are more fundamental questions to be asked such as whether the construct of Stamp Duty as a tax is truly effective both functionally and economically. SDLT acts as a partial blocker to home moving decisions. At the same time, if the Government tax revenue associated with all the downstream economic activity is far greater than SDLT itself - then it seems counter-intuitive and outdated as a tax that is in need of reform longer term”
Dan Montagnani, CEO, Groundsure and Mining Searches UK