The Association of Short Term Lending (ASTL) and the Financial Intermediary and Broker Association (FIBA) have warned that many buyers currently undertaking transactions may not complete by the deadline.
It could mean many end up with shock tax bills through “no fault of their own” as the high volumes of transactions created delays throughout the homebuying process, the two trade bodies said in a statement.
Activity has been at record levels since July when the tax break was announced by the chancellor to stimulate the market.
FIBA and ASTL said: “Delays are being reported at many of the stages in the mortgage process, from valuations, offers, through to conveyancing and searches and this is only likely to be exacerbated during a second lockdown where everybody is encouraged to work at home.”
And added: “We firmly believe that this situation cannot be [ignored], and we urge the government to put some provision in place to prevent a cliff edge cut-off on 31 March.”
The pair said one possible solution is to provide a “grace period” to borrowers who have a mortgage offer but are not able to complete by the deadline.
Or a tiered reintroduction of stamp duty at different values may offer a smoother transition to the pre-Covid rules, it was suggested.
The two associations said: “This approach would help everyone within the process, allowing prospective purchasers to relax and enabling businesses within the transaction process to operate effectively and efficiently. Nobody wants a cliff edge on 31 March, and it is within the government’s power to prevent that happening.”