Rachel Reeves has delivered the Spring Statement, outlining her plans for government spending and where the economy stands following "painful" tax hikes and cuts made during last October's Budget.
As many in the industry expected, no mention was made of extending the Stamp Duty deadline, meaning April 1st will be no joke for thousands of home movers and first-time buyers in England and Northern Ireland who now face an extra £2,500 in stamp duty costs.
Many across the industry had been urging the Chancellor to implement an SDLT extension ahead of today's announcement, including Rightmove, which recently called for a small extension in order to help buyers currently going through the process of purchasing the opportunity to complete without being hit by an SDLT increase.
Rightmove data shows that in England alone, almost 74,000 people are likely to miss Tuesday's deadline and complete in April, with roughly a quarter of them first-time buyers who will have to stump up a collective £34m in Stamp Duty. The changes do not affect Scotland and Wales, which have different property taxes.
While the majority of buyers have factored in a stamp duty increase into their financial planning, 21% have not, leaving themselves in potential financial turmoil should they miss next month’s deadline to complete.
The good news is that agents are forecasting a relatively minor fallout and, whilst 66% expect to see an increase in transactions falling through, 51% of these agents are only anticipating a minor increase in this respect.
Michael Cook, Chief Executive Officer of Leaders Romans Group, said, "There is undoubtedly a long-overdue need for a comprehensive reassessment of Stamp Duty.
"Unfortunately this may have to wait until a future spending review, but in the meantime, I would hope that the government sets about considering changes to what can be a very damaging tax – one that can cost the Treasury, rather than benefitting it, bearing in mind the unintended consequence of discouraging people to move up the property ladder."
Matt Thompson, head of sales at Chestertons, says: “We have met a lot of first-time buyers who held out hope for the Chancellor to make a U-turn on stamp duty thresholds in today’s Spring Forecast.
"As this hasn’t been the case, first-time buyers will now have to ensure that their budget can cover the cost increase, which means some might compromise on location or type of property. Although the rush of first-time buyers that the market has seen earlier this year has slowed down, demand remains strong as mortgage rates are still attractive enough to motivate buyers to get on the property ladder.”
“Earlier this year, the news reported an exodus of wealthy individuals from the UK amid the abolition of Non-Dom tax breaks. Although the Chancellor decided to soften those changes, it had already alienated a demographic that is key to the UK’s long-term economic growth. We are pleased that Rachel Reeves has taken the backlash into consideration and decided not to introduce a mansion tax for the time being which could see some HNWIs deciding to stay or return to the UK.”
Rachel Springall, Moneyfactscompare, said, “Time is ticking down for borrowers to finalise their property purchase to take advantage of the Stamp Duty Land Tax discount. The nil-rate tax threshold up to £250,000 will drop to £125,000 and the First-Time Buyer’s Relief nil-rate tax threshold of up to £425,000 will drop back down to £300,000.
"These reliefs were going to end, but there have been repeated calls for a further extension to boost the housing market. This means buyers who miss the deadline will need to ensure they have some decent savings to pay the SDLT, so mortgages which help borrowers save on the upfront cost of their deal or even offer a generous cashback payment could be more attractive.”
Rightmove's Colleen Babcock says, “It’s extremely disappointing that the government have not used the Spring Statement as an opportunity to extend the impending Stamp Duty deadline for those currently going through the home-moving process. We estimate over 70,000 buyers are going to miss the deadline and complete in April instead, and a third of those are first-time buyers.
“Given the current challenges faced by first-time buyers, our data shows that a typical first-time buyer in Britain now faces average monthly mortgage payments of £940, a 59% increase compared with £590 per month five years ago.
"Over that same period, rents have increased by 40% across Great Britain. So, while we welcome the government's focus and investment to help build more affordable homes, we’re keen to hear more about how this, or other incentives, can help more first-time buyers.”
Iain McKenzie, CEO of The Guild of Property Professionals, comments, "We need more than just planning reforms to truly unlock the potential of the property sector. Stamp duty reform, mortgage accessibility, and targeted incentives for buyers and sellers must all be on the agenda if we are to create a sustainable and thriving housing market that benefits both individuals and the economy as a whole.”
