Delays in the home buying process at the moment mean that those that miss the stamp duty holiday deadline will have up to £15k extra to pay on their purchase. So will the government extend the deadline? If so, when? And what can you do to speed up your purchase?
The stamp duty holiday means that until end March 2021, the level at which stamp duty is charged on a residential property is being temporarily raised to £500,000.
The government launched this tax break as part of its “Plan for Jobs” in July 2020. By September government reported a 20% increase in property transactions, alongside a reported 33% of homeowners wanting to spend the savings on home improvements, further boosting businesses and jobs.
Yes, that 20% increase could have been due to post-lockdown pent up demand. And yes, most homeowners spend money improving their new homes anyway. But you can’t argue that the stamp duty holiday has stimulated the housing market.
So why should the stamp duty holiday be extended?
The trouble is, the stamp duty holiday may have over-stimulated the market.
As more people try to take advantage of the tax holiday, some parts of the home buying industry continue to struggle to meet demand in lockdown which is impacting their operations. This means even though the housing market remains open at the moment, conveyancing solicitors, in particular, are struggling.
This coupled with delays in mortgage approvals, local searches and surveyors mean that the average property transaction time has gone from 12 weeks to 16 weeks. This four-month timescale to complete a purchase means new buyers are now unlikely to meet the deadline of 31st March.
So members of the property industry have written to the government asking for an extension. Last month a petition started by a new home buyer asking for a 6-month extension to the tax break reached over 100,000 signatures and will be debated in the House of Commons (assuming these debates are allowed during the current lockdown).
Clearly, a lot of people agree that consumers shouldn’t be faced with a huge tax bill when they started the process of buying a home in good faith of meeting the stamp duty holiday deadline.
But will the stamp duty holiday be extended?
The government has re-stated this month that there is no plan to extend the stamp duty holiday.
But it wouldn’t be the first time the government has changed its mind at the last minute, especially during the pandemic. The Chancellor may be waiting to see how the economy is shaping up at the start of 2021 before deciding.
In fact, the Sunday Times this week was quite adamant that the Chancellor is considering an extension to the stamp duty cuts.
We do however have concerns over the proposal for only a six-month extension. It could act to simply shift the cliff-edge to later on in the year.