The stamp duty holiday has been extended until 30 June, chancellor Rishi Sunak has confirmed in Wednesday's Budget, a decision warmly welcomed by campaigners and homeowners alike.
Aspiring homebuyers had been left fearful the initial impending deadline of 31 March to ensure completions would lead to them missing out on tax savings of up to £15,000.
According to Rightmove, one in five sales that were agreed in the same month the stamp duty holiday was first announced in July last year still haven’t been completed, meaning thousands of deals could have fallen through. The stamp duty holiday extension now affords homebuyers with more time to complete their transactions.
Rightmove’s property expert Tim Bannister said: “This three-month extension will come as a huge relief for those people who have been going through the sales process since last year and were always expecting to make use of the stamp duty savings."
And David Hannah, principal consultant of Cornerstone Tax, said: "We welcome the news that the feared ‘cliff edge’ at the end of this month has been avoided, with nearly 200,000 transactions potentially saved."
Stamp Duty Holiday Tapering Effect Announced
The chancellor also confirmed that following 30 June, stamp duty holiday exemption will be kept at double its standard level (£250,000) until the end of September, and then return to its current level (£125,000) from 1 October.
David Hannah said of the announcement: "We are also interested to note the ‘tapering’ effect which we and other commentators had called for, with the raising of the Nil Rate band to £250,000 from the end of June until the end of September.
"While there is still a danger of a mini cliff edge at the end of September, the impact will be far smaller than it could have been."
What is the Stamp Duty Holiday?
The stamp duty holiday, introduced in July 2020, is a tax break which exempts the first £500,000 of all property sales from stamp duty.
It delivered a shot in the arm to the housing market in 2020, following months of lockdown which essentially led to a housing market freeze. It has since inspired a boom in house prices.
The holiday was also praised for its impact on those considering renovating a house, and those in the midst of buying or considering a move in the coming months, who can reinvest the savings into their project.
But the clamour put the housing sector under pressure. Nearly a third of prospective home buyers have been refused a mortgage since the stamp duty holiday announcement, Market Financial Solutions (MFS) revealed in September, with mortgage lenders opting for caution following a turbulent 2020.
Rightmove estimated earlier this year that 613,000 property sales agreed in 2020 were “stuck in the processing logjam” and awaiting legal completion. Of those, 100,000 buyers were expected to miss out on their stamp duty saving prior to the extension.
How to Avoid Stamp Duty Holiday Scams
Home buyers looking to benefit from the stamp duty holiday have been warned about fraudsters targeting the tax break.
UK Finance, which represents financial firms, says that fraudsters have targeted large sums of money, including deposits, with homeowners at risk of being manipulated into paying money into the wrong account by fraudsters.
It has observed instances of criminals pretending to be estate agents and asking for personal details, claiming that the person moving home is due a “refund”.
UK Finance also warns that home buyers are at risk from identity theft, in which letters sent to old addresses are used by criminals to apply for credit or benefits in their name.
Home buyers should be alert to emails purporting to contain new payment details from firms they are already dealing with, or duplicate invoices for services. Moreover, it is important to check payment details with agents or solicitors by phone before transferring money.
To avoid identity theft, UK Finance says householders should ensure they notify banks, building societies and other organisations of a change of address, and set up a redirection service for any other post.
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