Last updated on February 24th, 2021 at 02:09 pm
Now, it is understood that Chancellor Rishi Sunak is considering a six-week extension to the holiday, which will help prevent thousands of home buyers from falling into a “completion trap” and, according to Rightmove, will save those buyers up to £1 billion.
The stamp duty holiday, which was announced in July 2020, means that stamp duty will only become payable on property over £500,000, rather than the pre-holiday level of £125,000. This has led to a huge increase in the number of property transactions, which is, of course, good for the property market and the economy in general. However, this, along with further lockdowns and COVID-related staff shortages has led to various delays which have left some people worrying that their sale or purchase will not complete by the deadline of 31 March 2021. An extension to mid-May is short but would be welcomed as a means of offering those who are hoping to benefit from the stamp duty holiday a longer period in which to do so and the chance to avoid having to find substantial extra funds to pay the tax – or make the difficult decision to pull out of their purchase.
Whatever date the stamp duty holiday comes to an end, first time buyers will continue to benefit from increased stamp duty thresholds whereby it only becomes payable on property over £300,000, then 5% on anything above that, up to £500,000. Stamp duty is then payable by first time buyers at the standard rate on the whole value of the property.
It remains to be seen whether or not an extension to the stamp duty holiday is confirmed and on what basis, but we expect to hear more soon and will keep our clients updated when we do.
Author: Caroline Murray, partner and head of the conveyancing team.