The amnesty on first-time buyers paying stamp duty is set to end on 24 March, despite figures showing a significant rise in mortgage activity during the ‘holiday’.
First-time buyers currently do not have to pay the one per cent tax on properties valued at less than £250,000, resulting in a flurry of activity in the housing market. Agents, such as House Simple, have reported “viewings flooding in at unprecedented levels”.
Recent data from the Bank of England shows a £1.6 billion increase in lending secured on properties in January, which is double that of the previous six-month average of £800 million. A fifth of surveyors registered with the Royal Institution of Chartered Surveyors predict that transaction levels will increase during the next three months.
William Hunter, the founding director at Hunter Wealth Management, predicts the rush to buy caused by the stamp duty amnesty will result in a slump in the market once the deadline passes.
“The number of new home loans will almost certainly settle down in the months ahead, as the mortgage market clicks back into conservative mode,” he says.
The Council of Mortgage Lenders is already asking for an extension on the stamp duty holiday while others are calling for a complete overhaul of the tax. Sophie Gosling, House Simple’s company director, says: “The way that stamp duty is levied is inherently very flawed. At the moment the jump from one per cent to three per cent at the £250,000 level causes all sorts of issues. It makes no sense that a property worth £250,000 should have stamp duty of £2,500 applicable, but a property worth £1 more should have stamp duty of £7,500 applied.”