Monday, May 23, 2022

Sunak mulling stamp duty extension by six-weeks

stamp duty

According to HMRC data released this month, stamp duty transactions in the last quarter of last year were 43 per cent higher compared with the third quarter of 2020

According to The Telegraph, Chancellor Rishi Sunak is considering extending the stamp duty holiday by one and a half months to prevent up to 100,000 homebuyers from being caught in a “completion trap”.

The 10-month tax relief is set to end on 31 March, but the Treasury is believed to recognise that a surge in transactions during the second half of last year and extended completion times as a result of the national lockdowns has led to a rise in half-completed purchases.

According to HMRC data released this month, stamp duty transactions in the last quarter of last year were 43 per cent higher compared with the third quarter of 2020.

Mortgage approvals jumped more than two-and-a-half times in the second half of last year, with a rise in demand that has continued into 2021 seeing house purchases taking over three months to conclude.

Online mortgage broker Trussle said last month that it currently takes 134 days to complete a property purchase in the UK.

Repeated lockdowns have led to lengthy delays for conveyancing solicitors, mortgage lenders and search departments.

But the chancellor is believed to be against a six-month delay as demanded by some groups in the mortgage industry, as this would have a “gratuitous” impact on tax receipts.

The chancellor will unveil his Budget on 3 March, and has pledged to “set out the next phase of the plan to tackle the virus and protect jobs”.

Trussle head of mortgages Miles Robinson says the chancellor mulling plans to extend the stamp duty holiday “offers a glimmer of hope to buyers racing to beat the current deadline”. But calls for a longer delay.

Robinson adds: The surge in demand has triggered long delays in the processing of transactions. It currently takes 134 days to complete on a property in the UK and it’s been reported that one in five buyers are facing more than a six-month wait for completion. Therefore, a potential six-week extension could prove invaluable to the estimated 100,000 property purchases currently underway.

Robinson says: However, there will be many who are yet to begin their home ownership journey but still hoping to benefit from the tax relief. For these people, the proposed extension won’t be long enough. Whilst their mortgages might be approved before the deadline, the current wait time for other necessary processes, such as surveys, valuations and local searches are likely to take longer.

He adds: As the wider economy continues to recover from the coronavirus pandemic, we’d urge the government to consider granting a longer extension or adopting a tapered approach to ending the stamp duty holiday.

According to a survey by high-net-worth mortgage broker Enness Global last month, almost 70 per cent of homebuyers prefer the extension of the stamp duty holiday while just under half are concerned about missing the current deadline.


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