Will the stamp duty holiday be extended?

With less than seven weeks until the stamp duty holiday is due to end, consumers in the process of buying a new home may miss out on the tax-reduction and instead find themselves paying out thousands of pounds more than they expected on completion.

Many buyers are keen to take advantage of the stamp duty holiday which is due to end on 31 March.

In July, the government suspended stamp duty on the first £500,000 of all property sales in England and Northern Ireland to help boost the market, until 31 March 2021. In Scotland, where the equivalent levy is called the Land and Buildings Transaction Tax, and in Wales, where buyers pay Land Transaction Tax, there have been temporary tax breaks too.

Anyone completing a purchase on a main residence costing up to £500,000 before the deadline will not pay any stamp duty, and more expensive properties will only be taxed on their value above that amount.

This can save buyers as much as £15,000, if they are buying a property of £500,000 or more.

Therefore, many thousands of people, planning to move during the pandemic, now are racing to meet the tax break deadline at the end of March.

Data from property portal Zoopla, for the BBC, suggests that between 70% and 82% of sales would be stamp duty free if they completed by the end of March.

That, and savings at the higher end of the market, created a surge in activity. In turn, that meant professionals in the sector, from surveyors and solicitors, to local councils and estate agents, were all busy.

The extra workload, at a time when many faced Covid-related staff shortages and practical working restrictions, meant delays in the house-buying process.

Estimates suggest that as many as 300,000 sales could fall through because the stamp duty break will expire - although there is no way of knowing yet how accurate that prediction will be.

Zoopla predicts that there will be a sudden drop-off in sales, with an expectation of 20% fewer transactions between April and June compared with the first three months of the year.

A petition, set up by a first-time buyer whose new home will not be built in time, is calling for a six-month extension to the stamp duty holiday. It has been signed by nearly 150,000 people.

Finance ministers in Scotland and Wales have confirmed their plans to cancel the tax break at the end of March, giving people time to prepare, and there is still little sign of Mr Sunak doing things any differently at next month's Budget.

A Treasury spokesman said: "The temporary stamp duty cut is helping to protect hundreds of thousands of jobs which rely on the property market by stimulating economic activity.

"Its time limited nature is what has encouraged people to take advantage of the scheme."

Posted on Feb 11, 2021.

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