No extension to stamp duty holiday, yet?

Property industry disappointed after Chancellor's latest spending review does not include stamp duty extension.;
Parliament

The Chancellors spending review, which took place on 25th November 2020, left the property industry disappointed. A much desired extension to the current stamp duty holiday deadline was not announced.

The stamp duty holiday, introduced on 8th July, ensures no stamp duty is paid on the sale of any residential property worth up to £500,000.

Landlords, whilst not subject to the full benefit, are eligible for a saving on stamp duty, as only the surcharge portion of the tax, for those property values affected, remained payable.

Wide support for stamp duty holiday extension

With the scheme due to end on 31st March 2021, many in the property industry had been vocal about their wishes for it to be extended further.

Neil Cobbold, CEO of Payprop noted that an extension to the holiday would create “A longer period for property buyers to benefit from significant tax savings and would provide the market with a welcome boost”.

Financial risk of missing the deadline

The fear for buyers is that any delays they encounter during the process may mean their completion date is pushed past the deadline on 31st March.

If the deadline is missed, the risk is that thousands in stamp duty may become payable, which hadn’t been budgeted for or, for landlords, would render a purchase less attractive – or even no longer financially viable.

The upshot could cause sales to fall through and chains to collapse.

Pressure is building, as volumes double

The estate agency, Zoopla estimates that around 140,000 sales are currently in progress, double the amount usual for this time of year.

This extra demand on all parties involved in the process, has seen the speed at which key services are carried out, such as valuation and conveyancing, become much slower. This in turn has placed further pressure on those looking to complete before the deadline.

Zoopla estimates that only 50% of sales agreed in January are completed by the end of March in a normal year. Coupled with the extra pressure caused by the pandemic, many buyers could miss out on the stamp duty holiday altogether.

For those looking to take advantage of the tax break, this message could not be timelier. Do not waste time if you are purchasing, the time is already tight to receive the tax break.

The wider benefits of an extension

The effect of its ending will be felt by more than those just moving house however. In his initial announcement the Chancellor, Rishi Sunak, stated that the benefits would be felt by “cleaners, brickies and decorators” in the form of an increase in demand for their services.

Many people in these industries now fear that without the protection they received from the stamp duty holiday their jobs and businesses could be at risk.

Rob Houghton, CEO of Really Moving affirmed that the effects of not extending the stamp duty holiday would be wide reaching, stating “When someone moves house it’s not just the estate agent who gets paid – it’s also the solicitor, the financial advisor, the surveyor, the removals firm and often the cleaner, the electrician, the furniture shop and so on”.

Will there be a stamp duty extension?

Other schemes, set up to support the economy as a result of the impact of the Covid-19, have been extended. One might be forgiven for thinking the same could happen with the Stamp Duty extension.

However, with no decision yet announced as to whether or not there will be an extension, the Chancellors silence is merely adding to the uncertainty.

The industry continues to lobby for an extension and hopes that a decision will be announced soon, to ensure that they have time to prepare for 2021, whatever the outcome maybe.

An official petition has been started, proposing a 6-month extension to the Stamp Duty holiday.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.