If that sounds counterintuitive, consider this for just a second. Should there be an announcement around changes to stamp duty this week which aren’t actually introduced until the Autumn, then it’s highly likely this will stall the number of sales and purchases in the meantime. Ask yourself this, why would you buy something now and pay thousands of pounds of stamp duty, when you can wait and either pay less or even nothing at all later in the year?
In other words, unless firm dates and a plan for how this will be implemented are made clear this Wednesday, this could significantly dampen the resurgent property market over the next few months.
First time buyers are already able to take advantage of a total exemption of stamp duty on purchases up to £300,000. That means it’s quite possible any changes announced this week may not make a difference to the majority of those taking their first steps on the ladder.
The current rumour-mill suggests that the threshold at which stamp duty is payable could be temporary raised for everyone to £300,000 or potentially even £500,000 which then broadens the net, meaning more buyers could possibly benefit from savings.
That could, however, come with the possibility of a re-adjustment of tax paid on property purchases of over £500,000 to rebalance the books.
READ MORE: Stamp duty rules change today – you could receive a refund on delayed purchases
Should such a change be made, if it were to prove substantial it could then impact the number of higher value homes sold while the scheme is in place. This could disproportionately impact the market in London and around the South East where average property values are far higher than the rest of the country.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, commented: “My message to the Chancellor would be that an announcement on relieving the stamp duty burden would be welcome but please either announce that you are changing it one way or another.
“Please don’t say you are thinking about it or it may be introduced in a few months. Otherwise, you will stop the market in its tracks as buyers and sellers wait to see what will happen before making decisions and you will kill off any or much of the growing increase in activity we have seen since lockdown restrictions were eased.”
Jeremy added: “More transactions are not just good for the property market but have far-reaching benefits for the wider economy by improving job and social mobility in particular.”
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Peter Ambrose, Managing Director of property lawyers The Partnership agreed and observed: “The rumours circulating over the weekend about the Stamp Duty changes are not particularly helpful. We have already had several clients call us this morning concerned about possible changes and whether they should delay their transactions.
“Right now, we don’t know if this will affect deals that are already exchanged or not, which means even more uncertainty; the exact opposite of what we need right now.”
There is also a need to take a holistic view around mortgage lending. If, as has been mooted, any stamp duty holiday is aimed at assisting the lower end of the market, it’s perhaps relevant to ask how helpful is this likely to be in practice, given the vast majority of lenders have withdrawn their five and 10 percent deposit mortgage products at the moment.
According to finance data information provider Moneyfacts, as of today there are only 60 mortgage products available for those with a 10 percent deposit, reduced from 762 products that were available this time last year.
The number of five percent deposit mortgages currently available is even lower, with just 14 products in the market today, reduced from 400 at the same time in 2019.
Eleanor Williams of Moneyfacts commented: “The news that potential changes to stamp duty charges may be on the horizon is largely positive, however until there is further clarity on the specifics as to what amendments may be made, who will benefit is not yet clear.
“The current picture of the mortgage market reflects that lenders have an appetite to lend and are adapting to keep pace with an evolving economic landscape and making changes to product ranges and criteria with great regularity.”
Eleanor continued: “However, there remains a limited number of mortgage products available to those with a low level of deposit.
“There has been an overwhelming level of demand from borrowers seeking products in these sectors, leading to some lenders who had recently brought back products for borrowers with a five percent to 10 per cent deposit or equity needing to quickly withdraw those to ensure their workload and service levels could be managed.
“The potential for negative equity issues should house prices slump is now also a spectre, with lenders needing to be cautious and mitigate risk.”
Another factor to consider here is that, for those who may wish to take advantage of any temporary stamp duty reduction to trade up may find it difficult to secure a mortgage to move home if they’ve taken a payment holiday in the last few months.
There have already been cases recently where some lenders have refused mortgage applications from those who’ve taken a mortgage payment holiday due to Covid-19, even though the Financial Conduct Authority announced that these wouldn’t have a negative effect on a borrower’s credit rating. That’s still the case, however lenders use other means to assess affordability in addition to credit ratings, meaning that as many as one in six households could find getting another mortgage very difficult in the next 12 to 18 months.
Of course, depending on what’s announced this could all look very different. Mr Sunak’s response to the health crisis has been widely welcomed by many, so the auspices are positive that any consideration around temporary stamp duty reform won’t fall down at the first hurdle.
If he gets it right, Mr Sunak could unleash the potential of the housing market to lead a wider economic recovery by safeguarding existing jobs and creating new ones, as well as fuelling consumer spending which will be such a vital part of getting the country back on its feet.
The devil will be in the detail.
Follow Louisa on Twitter: @louisafletcher