UK's stamp duty deadline causes chaos for property market

For driver Stephen Townsend and his team at British removal company Purdys of Cheam, the past 10 days have been exhausting. The crew have been working up to 19 hours a day, seven days a week across the Greater London area and beyond to meet soaring demand for removal services in the UK in the run up to the end of the stamp duty holiday . June 30 is the last day when buyers can cash in on the full tax break, first unveiled in July last year, which offers buyers a saving of up to £15,000 ($20,817) on the first £500,000 of a purchase. “It’s a nightmare and we’re knackered, we haven’t let anyone down but it means some days we finish at 2am", said Mr Townsend. "A lot of moving companies are not turning up at all and then people are ringing to ask if we can move them and we can’t because we’re booked up until the middle of July." Britain’s housing market has seen a surge in demand and prices boosted by the stamp duty holiday, first unveiled by Chancellor of the Exchequer Rishi Sunak last year to help the property sector during the pandemic. While the tax break was initially set to expire on March 30, it was extended by Mr Sunak in his March budget to prevent the market falling off a cliff edge. However, with the new deadline just days away, the fear is that some buyers , who have already borrowed up to their maximum limit and then miss the deadline , will not have the extra funds to pay the tax bill, which could force them to pull out. As a result, removal companies, conveyancers and estate agents are working round the clock to get deals across the line before the deadline . Purdys are taking up to three bookings a day at the moment to help buyers, with some trying every trick they can to secure the tax bonus. “Instead of moving people from one house to the other house, we're moving their stuff into storage, and then moving them to their new house later on because we literally don't have the manpower,” said Mr Townsend, who has worked for the company for a year. “Some customers are doing tenancy agreements, so they can stay in the house they sold for two weeks to get the completion done.” Solicitor Lynn Murray, owner of eponymous law firm Lynn Murray & Co in Cranleigh, Surrey, has 42 transactions to complete by midnight on Wednesday and says the past few weeks have been her busiest time in 20 years of operating, “I’m going away this weekend and Monday will be my first day off since September,” she said. Last week, she completed 30 transactions and said the volume the company is processing is up 40 per cent compared with June 2019, when the market was operating at normal levels prior to the pandemic. While some staff are working extra days, the company has also hired an extra employee to cope with the demand. “I'm getting emails from people on the weekends, and other solicitors are sending emails at 6.30am in the morning so it’s all hands on deck. I was out yesterday buying presents for all the staff for Wednesday, for putting in such a sterling effort,” said Ms Murray. However, not every buyer will complete in time due to inefficiencies in the process, something Ms Murray warns places individuals and companies at risk of being sued for damages. “There are going to be a lot of discussions about people not completing and where the delay happened,” she said. "Some people are likely to be looking at claims for damages," she said, if a deal does not complete, "because solicitors didn’t get the money through in time or the lenders didn’t get the money through in time". Ms Murray said those in multiple chains may see people at the top of a chain paying the full stamp duty levy, while those at the bottom of the chain get away without paying. And buyers have been so desperate to complete in time, they have cut corners, such as omitting to carry out essential surveys for flood threats or subsidence. “There are still people that I haven’t reported to yet that are saying 'you do know I want to complete before the stamp duty deadline',” said Ms Murray. One of the biggest challenges is people not being physically able to move house because of a shortage of removal companies. Demand for removal vans has increased 200 per cent ahead of the deadline, compared with the same time last year, according to website AnyVan. Some buyers choosing to move themselves are unable to source a van at all, according to Mr Townsend. Purdys, which hires vans for all its removal jobs, has also struggled to hire the right sized vans amid the high demand. “It means everything takes longer because we have to do multiple trips, in and out of storage, and multiple journeys because you can't fit it all on one van because the vans aren’t available.” Estate agent Edward Norman is also putting in extra hours to cope with the surge in demand for homes in what he describes as his busiest time in 30 years running Roger Coupe in Cranleigh. While the company’s opening hours are normally 8.30am to 6.30pm, Mr Noman now works up to 11 hours a day, taking extra calls in the evenings and at weekends. “It’s been pretty relentless,” he said. With demand for property outstripping supply, Mr Norman says there are sometimes up to four buyers for one property with deals going down to blind bids and people willing to pay well over the asking price. “We had one property that went £100,000 over the guide price,” he said. Mr Norman said companies involved in the buying process “don’t have enough hours in the day to deal with it all. “Unfortunately the deadline has come when the system is so bogged down with the volume of business," he said. “The deadline did catch a lot of companies out, [such as] banks and solicitors that didn't have the staff to deal with that volume, so it has been mad”. With two transactions set to complete on Wednesday, Mr Norman said deals are going “right down to the wire” but not everyone will make it. “Unfortunately, one couple won't make it because of matters beyond people's control, where they just can't get the information back in time." Property prices have soared since Mr Sunak first introduced the tax break last year, with prices rising 8.5 per cent in 2020 . The original March 30 deadline for the end of the tax holiday was extended by Mr Sunak in his latest budget statement, when the country was still under tight Covid-19 curbs. In May, prices surged to an average high of £261,743 , according to the Halifax House Price Index, up 9.5 per cent from the same month a year earlier and equivalent to £22,000 over 12 months. While the tax saving has propelled the market, Mr Norman said other factors have come into play, such as people wanting to move to the countryside amid the work-from-home trend and three lockdowns, as well as other government measures to boost the market such as a government mortgage guarantee scheme. Some wealthy buyers are also keen to take advantage of the tax holiday, Camilla Dell, managing partner at Black Brick, which helps Middle East investors purchase property in the UK , tells The National. She has one first-time client buying a home for under £1 million trying to meet the deadline this week. “Anyone that’s close to an exchange would rather save the £15,000 than not,” she said, adding that some conveyancers are working through the night to cope with the level of demand. “Having said that I don’t believe any of our wealthy clients care that much.” UK prime regional house prices accelerated by 3.2 per cent in the second quarter of this year and by 8.5 per cent compared with a year earlier, the strongest growth since 2010, according to Savills. “We have continued to see price growth over the past quarter despite the looming stamp duty holiday deadline,” said Lucian Cook, Savills’ head of residential research. “Our June client survey told us the majority of prime market buyers (71 per cent) are not concerned about the removal of the stamp duty holiday, while just 5 per cent of those still hoping to complete by the end of June said they might reconsider their purchase.” On July 1, the threshold at which stamp duty begins in England and Northern Ireland falls to £250,000, before it reverts to the normal system on September 30. For those that miss the deadline, Mr Norman said there has been some disappointment, with some buyers getting emotional about losing out. “We hear people saying, ‘Oh, we've lost X amount of money’, but they haven’t lost it because they didn't have in the first place. It was just that they were going to save that amount of money," he said. “I was talking to a solicitor on Saturday who said, ‘let’s just get the June date out of the way, and then we can all move on’, because people are irrational and rude and everyone's hyped up about it. Unfortunately it hasn't brought out the best in some people.”

UK's stamp duty deadline causes chaos for property market

Homebuyers rush to complete deals to lock in £15,000 saving