On 8 July 2020, the Chancellor of the Exchequer announced a temporary stamp duty holiday that cut the rate of stamp duty to zero per cent for the part of the transaction under £500,000 until 31 March 2021. i.e a purchase at £700,000 would incur stamp duty on the £200,000 in excess of the threshold at the existing rate.
A parliamentary e-petition was set up, calling for the Stamp Duty holiday deadline to be extended. The petition called ‘Extend the Stamp Duty Holiday for an additional 6 months after 31st March 2021’ has reached over 110,000 signatures, which means parliament will consider this petition for debate.
Chancellor Rishi Sunak is considering an extension to the current Stamp Duty holiday until September 2021!
Last month the Government were firm the Stamp Duty holiday would not be extended with a spokesperson for HM Treasury said: “The SDLT holiday was designed to be a temporary relief to stimulate market activity and support jobs that rely on the property market. The government does not plan to extend this temporary relief.”
However, with the growing pressure of extending the Stamp Duty holiday together with the concerns that thousands of people will not complete before the deadline, no doubt many caused by delays relating to the Coronavirus pandemic and the struggles the third lockdown, the Chancellor has confirmed he will reconsider.
Rightmove’s Director of Property Data, Tim Bannister, says “There are still a huge number of sales agreed in 2020 that are stuck in the processing log jam and awaiting legal completion, with many hoping to beat the impending tax deadline. For those who fail to do so, there may be difficulties if they have factored the tax savings into their budget calculations.
The challenge of processing so many transactions in less than three months is made even tougher by the new lockdown restrictions, COVID-19 sickness and homeschooling further reducing capacity in conveyancing, legal searches and mortgage lending.”
Parliament considers all petitions that get more than 100,000 signatures for a debate, a date will be announced within the next couple of days.
Without a doubt the Stamp Duty holiday has helped thousands of people save money on their property purchases, there has been a rush on completing as many transactions as possible before the end of March to make sure as many people benefit from this relief as possible.
Unfortunately, there are many reasons why some properties due to complete within the coming months may not be able to do so before the end of the Stamp Duty holiday, meaning they will miss out on the saving.
In an ideal world the Stamp Duty should be scrapped completely or reformed, but right now we would like to see all those properties already in a transaction, before the deadline, be able to receive the savings from the Stamp Duty holiday.
Regardless of whether the Government extends the current Stamp Duty holiday, the savings will come to an end at some point. There are those who think extending the Stamp Duty holiday may increase any potential lull in the market further, when it comes to an end. Perhaps commitment to honour the stamp duty holiday to those currently involved in a transaction would ease the rush, and take the pressure off an over-burdened conveyancing system at such difficult times. Would a stamp duty extension encourage activity, with physical viewings, in contradiction of the government recommending less contact at the peak of the pandemic?
Within a recent news article, ‘We got through the year together!’ we discussed the reasons we are seeing behind many property purchases. We are seeing the motivation for moving swaying to more personal reasons. For thousands and thousands of people, the extra time spent at home during the lockdowns has encouraged them to re-evaluate their priorities and the work/life balance. Combine the wish with wanting to improve life quality together with the increased opportunity of working from home, this has given many people the freedom to choose to live away from the cities in favour of the lifestyle the South West can offer.
Zoopla reports sales were agreed on more than £300bn worth of property during 2020, that’s 26% higher than in 2019! So far 2021 is seeing buyer demand holding firm, we believe that the property market in our region will remain active through 2021 with values continuing to rise. Buyers will carry on being attracted by our fantastic way of life and beautiful surroundings.
We would love to hear your thoughts of the Stamp Duty holiday extension, head over to our Facebook post to debate the issue.
We are able to provide Covid Secure, contact free or virtual valuations.