As many of you know, the temporary stamp duty holidays are currently due to end on March 31st.

The tax holidays were introduced in July last year, with the intention of making it easier for hundreds of thousands of people to buy a home.

However, there are rumours this week that the government may extend the stamp duty holiday deadline in England and Northern Ireland by a further six weeks, until mid-May.

What would the extension mean for the property market?

If this six week extension was given the green light, our data analysts estimate that between 120,000 and 160,000 extra property transactions in England could benefit from the tax saving.

And if 160,000 transactions made it through, buyers could save a huge £1 billion in total.

The projection is based on the number of property transactions that completed each month in England between September and December last year, according to data from HMRC.

The extension would also mean the vast majority of sales that were agreed by the end of 2020 would complete in time to save on stamp duty.

There are an estimated 412,000 sales still currently in the legal process that were agreed last year across Great Britain.

What happens if the deadline isn’t extended?

Currently, we expect that 100,000 buyers across Great Britain who agreed a purchase last year are set to lose out, if the March 31st deadline stays.

Due to the nature of the conveyancing process there will be some people still unable to complete in time, but if the deadline were extended, it would come as a welcome relief to many of those desperately trying to get their purchase through the logjam.

What do the experts say?

Our resident property data expert Tim Bannister explained that, if a six week extension to the stamp duty holiday is given the green light, it should give the majority of people who agreed a sale in 2020 the chance to complete before the revised deadline.

He 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.”

What is stamp duty?

Stamp duty is a lump-sum tax that anyone buying a property or land costing more than a certain amount must pay.

The rate at which you’ll pay the tax varies depending on the price of the property and the type (i.e. residential or commercial).

What is the stamp duty holiday?

Back in July 2020, the government introduced a temporary stamp duty holiday that, at present, will run until 31st March this year.

The scheme has already helped countless home-movers save money, by reducing the amount of stamp duty that is payable as part of every property purchase.

Prior to the holiday being announced, you were eligible to pay for stamp duty on any property over £125,000, or if you were a first-time buyer, on any property over £300,000.

The stamp duty holiday has raised this threshold to £500,000 so, if you’re looking to trade up, you may well be able to save a fair amount of money on your move by completing your purchase before the holiday ends on 31st March.

It was reported last year that the average stamp duty bill would fall by £4,500 as a result of the tax holiday.

However, the stamp duty holiday only applies to properties in England and Northern Ireland.

The Scottish Government is responsible for Land and Buildings Transaction Tax in Scotland, and in Wales, buyers pay Land Transaction Tax, levied by the Welsh Government.

How does the stamp duty holiday deadline affect first-time buyers?

First-time buyers in England and Northern Ireland will still be mainly exempt from paying stamp duty after the deadline has passed.

This is because first-time buyers will continue to be eligible for a discount on stamp duty, as long as the purchase price of the property is £300,000 or less.

And given that the majority of newly listed first-time buyer properties are put up for sale for less than £300,000, this means that most first-time buyers will continue to be exempt.

In fact, our latest figures show that the average asking price of a first-time buyer property is £200,692.

First-time buyers will also not pay any stamp duty on the first £300,000 of their home purchase, on homes worth up to £500,000, after the deadline.

Stamp duty for the amount of the purchase price between £300,000 and £500,000 is charged at 5%.

The current average asking price nationwide is £318,580.

Use Rightmove’s Stamp Duty Calculator, here.

READ MORE: Why are house prices going up right now?

The header image for this article comes courtesy of Connells.

Article Source

Leave a Reply

Your email address will not be published. Required fields are marked *