Chancellor Rishi Sunak is reported to have decided on a three-month extension of the current stamp duty holiday until the end of June 2021.
After months of lobbying from the property industry, Rishi Sunak is expected to announce in next Wednesday’s Budget that the stamp duty holiday due to end on 31 March will be extended until 30 June.
Last July, the government increased the threshold at which stamp duty becomes payable to £500,000. Previously, the threshold was £125,000 (and £300,000 for first-time buyers). Buyers spending more than £500,000 save £15,000 in stamp duty by completing before the 31 March deadline.
Buy-to-let investors and buyers of holiday homes also benefit from the stamp duty threshold increases. However, they must still pay the 3% surcharge applicable to second homes and investment properties.
The stamp duty holiday has buoyed the housing market over the past eight months leading to backlogs in mortgage applications, surveys and legal completions. The Office for National Statistics says UK house prices rose by 8.5% in 2020, the highest annual growth rate since October 2014.
Rightmove estimates that more than 100,000 properties are currently stuck in what its property expert Tim Bannister calls a “huge logjam”. He estimates that if the holiday is extended, an additional 300,000 property transaction could benefit, saving buyers £1.75bn in stamp duty.
Critics of the extension say it will simply lead to another “cliff edge” as we approach the end of June.
We will update this article after next Wednesday’s Budget.
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