Early Friday morning, as part of the government’s Growth Plan 2022, the Chancellor Kwasi Kwarteng announced his plan to double the threshold at which people start to pay stamp duty from £125,000 to £250,000.
In addition, he stated that the level at which first-time buyers begin paying stamp duty will increase from £300,000 to £425,000.
The government said that the plan would allow up to 29,000 more people to move per year.
However, some property professionals have raised concerns that the change could generate excess demand and add to existing conveyancing delays.
Property search portal Rightmove reported that visits to its site rose 10 per cent immediately after the announcement.
Andy Sommerville, director of Search Acumen, said legal property firms would have to adjust to the change with “virtually no warning”.
He added: “The reality is that positioning stamp duty changes as a tax cut for hardworking people will land awkwardly on the desks of conveyancers who’ve barely had time to recover from the post-pandemic property boom brought on by the last reforms.
“That stamp duty ‘holiday’ was nothing of the sort for property professionals left struggling to turn the rusty wheels of the traditional homebuying processes.”
Cut will ‘over-stimulate an already over-stimulated’ market
Dan Salmons, chief executive of Coadjute, said the change would result in a “significant spike” in demand, adding: “Today, each and every property sale already involves an enormous amount of administration. The last time there was a stamp duty cut, property professionals were placed under incredible pressure.”
Lloyd Davies, managing director of South Wales-based online conveyancing specialist Convey Law, said the cut was “pointless” and will “over-stimulate an already stimulated” market.
He continued: “There is absolutely no point in this measure as we do not need to stimulate the property market. The market is buoyant and property prices are still rising.
“The conveyancing industry is still recovering from the cuts during the pandemic, which saw a sustained surge in the market and huge transaction volumes, the backlog of which the industry is still struggling to cope with.”
He noted that conveyancers had been limiting capacities during and after the pandemic “when we saw the cuts inflating an already over-stimulated market as many people sought to move for lifestyle reasons triggered by the pandemic”.
Transactions times could lengthen
Indeed, the volume of deals has meant that average transaction timelines have increased from 16 to 20 weeks over the course of this year and the proposed cuts will only make matters worse, according to Davies.
He said: “Cutting stamp duty will only exacerbate the tough situation the industry is in where we cannot process transactions legally to an ideal timescale because the demand is overwhelming.”
Stephen Ward, director of strategy at the Council for Licensed Conveyancers, was slightly more optimistic, noting that the Council “didn’t expect there to be a spike in activity like the one we saw with the pandemic holidays.”
However, he also advised firms “to be careful to ensure that they manage workloads to maintain the highest standards of service and advice to clients.”
