Property buyers and sellers will be hoping that reports of an extension to the stamp duty holiday turn out to be true as they race to complete transactions.
Currently the deadline for the end of the tax break is 31 March, but according to The Telegraph the Chancellor of the Exchequer Rishi Sunak is considering a six-week extension to mid-May in order to prevent tens of thousands of home buyers being caught in a “completion trap”.
The stamp duty holiday was introduced in July last year in a bid to “help kickstart the economy which had been hugely impacted by the coronavirus pandemic”, says the Daily Express.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
As part of a £30bn economic aid package, the stamp duty threshold was increased from £125,000 to £500,000 on residential properties sold in England and Northern Ireland between 8 July 2020 and 31 March 2021.
£1bn in savings - if deadline is extended
If the holiday is extended by six weeks, between 120,000 and 160,000 additional property transactions in England could benefit from the tax saving, says Rightmove. And if 160,000 transactions made it through buyers could save £1bn.
According to the property website, 412,000 sales agreed last year are still in the legal process. Of those, about 100,000 are expected to lose out if the deadline stays as 31 March.
Rightmove’s property expert Tim Bannister said: “We know the stamp duty holiday was intended as a temporary stimulus for the market, but the delays we’ve seen in the home-moving process have been through no fault of the buyers and sellers who agreed a sale last year and who are now desperately trying to get their deals over the line.
“The delays have been a result of the huge number trying to go through, along with the many challenges of the people involved in the process working from home. If there was a six-week extension it should give the majority of the sales from last year the chance to complete in time.”
‘Prolongs the agony’
If the tax snaps back on 31 March, as many as 100,000 deals may collapse, says the Daily Mail, which could “trigger a drop in house prices”. Sales worth £1.5bn are at risk and estimates suggest “one in five property deals” will fall through as a result.
Describing the stamp duty situation as “mayhem”, Estate Agent Today’s Graham Norwood says agents and conveyancers are “expressing doubt over whether a possible six-week extension to the stamp duty holiday will be enough to stop fall throughs”.
Rob Hailstone, founder and managing director of the Bold Legal Group, said: “It makes no sense to just extend the SDLT [stamp duty land tax] holiday. Another batch of would-be purchasers will simply miss the next deadline. Surely, the government either has to be creative or leave well alone at this late stage?
“It is like saying - good news Mr Hailstone your lethal execution date has been put off six weeks. Still going to happen, still going to be just as scary and just as final. Just prolongs the agony.”
Continue reading for free
We hope you're enjoying The Week's refreshingly open-minded journalism.
Subscribed to The Week? Register your account with the same email as your subscription.