For all the hundreds of thousands of housing transactions that take place every single year, the fact of the matter is that the UK public are only likely to have a very small number of purchase ‘interactions’ over their entire lifetime.
Indeed, according to research issued by Savills last year, prior to 2008, UK citizens would move (on average) 3.6 times after buying their first home, by last year that figure had dropped dramatically to 1.8 times over their lifetime. Which effectively means the average British homeowner will only move once every 23 years.
Given those statistics, the general understanding of Joe Public, when it comes to the UK housing market and, in particular, the process of purchasing may not be completely up to date. Why would it be? If, on average, you last bought 23 years ago then you’ll have probably forgotten how long it took and perhaps, like certain other life events, you’ll have forgotten how painful it might have been.
Hence, anyone looking at purchasing and trying to complete before the end of this stamp duty holiday, may consider (at the time of writing) four and a half months to be ample time to have go through the process. It’s perhaps why we are not expecting any let-up in appetite or demand to purchase over the next month or so, although reality could soon bite a lot of those would-be buyers (and indeed sellers).
To be blatantly honest, four and a half months should be more than enough to get through to completion. The fact that it is not is perhaps indicative of the huge strides we need to make in the years ahead. Even within the most complex of chains this should be achievable, let alone someone purchasing for the first time with no onward transactions relying on it.
But, the reality is somewhat different, and it’s why – even at what seems like a relatively early stage – there is a chorus of industry voices calling for the Government to reconsider the 31st March stamp duty deadline date.
This, after all, is an issue that is not just applicable to one particular part of the process. In fact, you might say that all parts are (at best) running to catch-up with themselves; traditional months like December, for instance, where you might expect a significant slowdown now look like they won’t meet their historical precedents.
Even if there is a tailing off in demand, the pipes – whether you are an agent, adviser, lender, surveyor, conveyancer – look very full, and the current working situations due to COVID-19 certainly work against a rapid dealing of the backlog. Our own business figures have hit record numbers for the last few consecutive months, and it looks likely that this will continue.
There will, of course, come a point when cases won’t have a chance of completing but I suspect that, consumers certainly, won’t be fully aware that (for some) that point may well have been and gone already. I read recently that one conveyancing firm is already telling clients that the likelihood of completing before the deadline has probably passed. Which must have been somewhat surreal for those clients to hear.
So, what can be done? Do we have a Government who is willing to see potentially hundreds of transactions not meet the deadline, and therefore not deliver the saving the holiday was supposed to bring? How might that go down with consumers who might rightly say they were tempted into the housing market because of the stamp duty decision?
For what it’s worth, the Government might already believe this has been a great success given the increase in transaction numbers, but is it willing to go through with a potential cliff-edge? Not just because of the number of transactions that won’t complete before the end of March, but what might happen to the housing market in general if we have simply brought a lot of 2021’s activity forward pre-holiday, and there is diminished transaction numbers to move through the process after it ends.
We may be being too pessimistic here – consumer confidence may well have been buoyed significantly by that time for demand to be maintained, and certainly with good news regarding a potential COVID-19 vaccine coming through, a future ‘normality’ does already look a lot nearer than it did even a few weeks ago.
However, I also tend to side with the vast majority of stakeholders at present. That an extension is justified, and could actually deliver far more in terms of UK GDP than it is currently costing in terms of stamp duty tax receipts. Another three, possibly even six, months would be more than enough, and if the Government wanted it could tier up the costs over the period, and/or pick a date by which transactions must have met a certain point in the process to be able to qualify for the holiday, even post-deadline.
There are solutions available and overall the benefits of doing so seem to outweigh the costs. However, this is not a decision that can be announced in February or March next year – it needs to come soon and deliver the certainty the industry and, more importantly, consumers are looking for.
Simon Jackson, Managing Director at SDL Surveying