A stamp duty holiday extension until 30 June has been announced in Wednesday's Budget by chancellor Rishi Sunak.
The stamp duty holiday has exempted the first £500,000 of all property sales from stamp duty, which was initially until 31 March 2021. The policy has been widely praised for helping more people get onto the property ladder, and for its potential to help those considering renovating a house, who can reinvest the savings made into their project.
But amid the pandemic transactions have slowed down, and it has been widely feared that thousands of sales would fall through without an extension.
Mr Sunak also confirmed that following 30 June, stamp duty 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.
Why The Stamp Duty Holiday Extension Could be Vital
The stamp duty holiday has led to house sales increasing to their highest level since before the 2007 financial crisis, according to the Centre for Policy Studies (CPS).
But property website Rightmove says that 412,000 sales agreed in 2020 remain in the legal process, and around 100,000 would struggle to complete without an extension.
By extending the deadline to June, the government hopes it will afford enough time to homebuyers yet to complete their deals.
Rightmove estimates an additional 300,000 property transactions in England could benefit from the three-month extension, meaning buyers could save £1.75 billion on the tax.
Nicky Stevenson, managing director at national estate agent group Fine & Country, said: “That sound you just heard was hundreds of thousands of people all breathing a collective sigh of relief.
“The loss of a £15,000 tax break would not have proved a dealbreaker for wealthier buyers in and of itself. However, they would have come under pressure to drop their price from further down the chain. For first-time buyers, who are integral to a well functioning housing market market, a few thousand pounds can make all the difference when stretching for a deposit."
Paresh Raja, CEO of Market Financial Solutions, added: “Extending the stamp duty holiday to 30 June is exactly what the property market needs. The appetite among buyers remains strong, and it makes sense for the government to build on this momentum through targeted tax reliefs."
Lockdown Means Delays Have Escalated
There was already massive demand to make the most of the tax break prior to the third lockdown.
Since the turn of the year, logistical delays have been escalating, with the average transaction taking 20 weeks to complete, up from 12 weeks before the pandemic started.
MPs Have Been Undecided on Extension Route
A virtual parliamentary debate in February saw cross-party MPs pledge support for an extension, while others disagreed this was the best way forward.
The debate was triggered after a petition calling for a stamp duty holiday extension hit 100,000 signatures, amid growing pressure on the government to extend the tax break.
Elliot Colburn, Conservative MP for Carshalton & Wallington, said: “A stamp duty holiday extension will assist many buyers to move to a property that they would not be able to purchase otherwise. This will help stabilise the housing market.”
But Labour MP Abena Oppong-Asare called the design of the stamp duty holiday "perverse" for leaving homebuyers on a cliff edge, and fears another extension will lead to a similar situation in three months.
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