Budget: A more distant cliff edge or welcome breathing room? Industry reacts to stamp duty extension

However, his announcement also included the news that the nil rate band will reduce from £500,000 to £250,000 from the end of June until the end of September, before reverting back to £125,000 from October 1st, in a move Sunak said would aid a “smooth transition back to normal”.

While widely anticipated, the move sparked a variety of responses from our industry, with some predicting that the date-based deadline will merely delay the issue of a ‘cliff edge’.

David Westgate, group chief executive of the Andrews Property Group, said the Government had missed a “gilt-edged opportunity to avoid another cliff-edge scenario”, adding:

“A better solution, surely, would have been to allow transactions, where a mortgage offer has been granted before the deadline, to complete at their own pace. 

“This would have avoided buyers dropping out of a transaction that's in progress because they aren’t able to complete before the deadline.

“It would also have given conveyancers the time and breathing space to work their way through the backlog of cases piling up on their desks, which are only likely to increase after today's announcement."

Nitesh Patel, strategic economist at Yorkshire Building Society, also was cautious about the news, noting:

“The hard stop scheduled at the end of September may just kick the can down the road for some buyers. Those who are mid-transaction may well face a similar situation of being confronted with an unexpected tax bill of thousands of pounds when the extension comes to an end, as well as disincentivising higher-value purchases."

Others, however, disagreed - saying the tapering extension would, in fact, help avoid the cliff edge as intended.

Tomer Aboody, director of property lender MT Finance, said:

“The stamp duty holiday extension is welcome and will ease the logjam many are facing. The gradual tapering of the return to the £125,000 nil rate band by 1 October should also help avoid the cliff edge that many feared we would have with a sudden cut-off point.”

Others, too, were positive about the announcement.

Frank Pennal, CEO of Close Brothers Property Finance Division, said it was a “very sensible move”, adding that “[the] property industry has been an engine for economic growth during the pandemic and this decision will enable that momentum to continue.”  

Matthew Tooth, Chief Commercial Officer at LendInvest, predicted that the extension would have a positive impact on house prices:

“Last year we saw a six-year high for residential price growth at 7%, partly driven by the first Stamp Duty holiday implementation by the Chancellor. Whilst previous analyst expectations for 2021 predicted stable growth of between 1% – 1.5%, combined with the highly successful vaccination drive in the UK, we can now expect higher growth for the market over the next quarter.”