Friday, August 19, 2022
Real EstateUK

Stamp duty holiday extension could help 300,000 sales

property in England

The rush to take advantage of the break, along with nationwide lockdown restrictions, has led to delays in the homebuying process

Nearly 300,000 property purchases in England could benefit from a three-month extension in the stamp duty holiday, according to estimates, as reports suggest the chancellor could prolong the tax break in next week’s budget.

Announced last summer, the tax saving is scheduled to end on 31 March.

However, Rishi Sunak is understood to have decided to extend it for three months in line with other measures to support the economy.

However, it is not clear if the extension would apply to all purchases, or apply just to those agreed before an earlier day, as lobbied for by some in the mortgage industry.

The rush to take advantage of the break, which amounts to a tax saving of £15,000, along with nationwide lockdown restrictions has led to delays and backlogs in the homebuying process, and calls for the removal of the deadline.

The property listing website Rightmove has estimated that if it is not changed, nearly 100,000 buyers who agreed a purchase in 2020 will have to pay the tax, which will add up to £15,000 to their costs.

It said that figure combined with sales that could be completed before a June deadline, could mean an additional 300,000 transactions escaped the tax, at a cost of £1.75bn to the Treasury.

The tax break has led to a boom in transactions and prices in recent months, with official figures showing prices climbed by 8.5% in 2020.

According to the credit referencing agency Experian, there were 12% more applications in February compared with the same period last year, even though the chance of completing before the March deadline is low.

Lisa Fretwell, Experian’s managing director of data services, said: Extending the deadline will help ensure these people get their deals over the line and provide a welcome boost for the mortgage market.

However some in the industry say that the chancellor will just delay the “cliff edge” if he simply extends the holiday, and that a new hard deadline would mean buyers continuing to attempt to complete at all costs.

Hedley Adcock, a director of property law firm Adcocks Solicitors, said buyers were “taking high-risk strategies to speed up the process”, such as skipping property searches and valuations. If an extension is announced next week, it is essential that a tapering-off period is also granted, such as a paperwork deadline, he said.


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