There appear to be few major economic and housing market measures which are not so heavily trailed in the media that they come as any sort of surprise when they are finally announced.
Indeed, one senses that a large number of these announcements are being tested in the public domain before any sort of final decision is made about whether they will become law. Clearly, cuts to stamp duty or holidays were always going to pass that litmus test and therefore on the 8th June we had the much-anticipated introduction of a zero rate for purchases up to £500k in England and Northern Ireland until the end of March next year.
What has perhaps taken some by surprise is that the changes are also applicable to purchasers of additional properties as well as those buying their main residence – a significant shift from the stamp duty policies of the more recent past which favoured domestic homeowners rather than landlords and investors.
Those purchasing for this reason will still have to pay the stamp duty surcharge of 3% but clearly there will still be a significant saving to be made for those buying properties between £125k and £500k.
I suspect for conveyancers that the inclusion of additional properties takes these stamp duty changes into a new realm because, in all likelihood, those wanting to purchase additional property over any time horizon, are now likely to want to conduct their business over the next eight months and secure the stamp duty saving available.
Prior to the extra surcharge being introduced for additional property purchases back in early 2016, we saw a large amount of activity from this demographic as they sought to secure their transactions before the stamp duty costs increased. You might well expect a similar level of activity in the period up until the end of March 2021 and that of course comes with its own challenges for conveyancers, especially given we are barely out of lockdown.
That said, it also appears to also present an opportunity, because I’m fully aware that many firms have been waiting to see whether the spike in pent-up demand post-lockdown would be continued throughout 2020 and beyond. Staffing situations are going to be predicated on a sustainability of activity, and whatever your view of stamp duty incentives, the likelihood appears to be that this will have an impact.
It is of course early days, and as I write there is no such ‘stamp duty’ holiday in Wales, but I’m already hearing anecdotal evidence from agents and mortgage advisers in England that this move has resulted in an increase in enquiries, and should these enquiries move to a conclusion then workloads for conveyancers should not just be sustained but improved upon.
There should be a large degree of confidence that our member firms are able to cope with another spike in demand, but what is perhaps not so clear is the longer-term goals of the Government in this area. We often hear that changes to stamp duty are seen as a blunt tool when it comes to delivering further activity, and there are already concerns that this may simply result in pushing house prices higher, potentially out of the reach of those younger buyers who the Government purport to want to help the most.
As a short-term measure it is likely to be effective, but we are perhaps more inclined to look beyond this period. What will happen post-31st March 2021? How can we greatly improve the home-buying process during that period to support a more sustainable market – one in which the number of fall throughs is greatly reduced and the time it takes to complete also goes in the same direction?
Conveyancers can clearly benefit from these stamp duty changes in terms of an anticipated increased workload for the next eight months, but at the same time, we need to move our process on and access the benefits that this could bring to all practitioners and stakeholders. One swallow does not make a summer and we need to ensure we’re all singing the same tune in order to deliver a much more efficient and effective property market for all.
Paul Smee is Non-Executive Chair of the Conveyancing Association (CA)