Stamp duty holiday extended by three months
The government has extended the stamp duty holiday by three months until June 30th, while there will be a smaller amount of tax relief after that.
As announced in Chancellor Rishi Sunak’s Budget, stamp duty will continue to be suspended on the first £500,000 of all purchases in England and Northern Ireland until June.
Meanwhile people won’t pay stamp duty up to £250,000 from June to September 30th, double the standard level of £125,000.
Housing market reinvigorated
Since the holiday was introduced demand has been stoked by the tax cut.
However, due to a combination of this demand and the impact of the pandemic, the speed of the housebuying journey has slowed considerably, with transactions taking as long as six months to complete.
It’s become to get a survey completed in the current climate, while the process of getting a mortgage is taking longer than usual.
Due to these delays, there were to fears that transactions would fall through by failing to meet the original March 31st deadline – as buyers could pull out if they were expected to pay far more in tax than they budgeted for.
Much of the house buying industry has responded positively to the announcement.
John Goodall, chief executive at mortgage lender Landbay: “The extension of the stamp duty scheme is good news for landlords and anyone wanting to purchase a property. It will certainly enable all of the purchases currently in the pipeline to get over the line.”
And Brian Murphy, head of lending at broker Mortgage Advice Bureau, said: “It offers some much-needed latitude to the industry as conveyancers have been overwhelmed by the sheer volume of transactions, and so the extension should help ease the current bottleneck the market is experiencing.”
However, the announcement has also attracted some controversy.
When a stamp duty holiday extension was discussed many though it would only apply to those already in the process of buying a house.
But the Chancellor’s announcement effectively means that the cliff-edge – where buyers could potentially miss the deadline and end up paying more than they expect – has just been delayed by three months. There will also be a second smaller cliff edge, running until September 31st.
Andy Sommerville, director of Search Acumen, said: “The Chancellor’s much-anticipated move simply defers rather than dodges the cliff-edge by putting it off until June.”
The deadline has given buyers a second chance to take advantage of the stamp duty holiday – which could provide a boost to investors and homemovers in particular.
However, with transactions taking months to complete, people shouldn’t bank on being able to take advantage of the tax change.
For those that are able to get transactions over the line however, Rishi Sunak’s announcement is very welcome news – and should give the housing market some new life as we head into the summer.