Changes to the stamp duty holiday
Chancellor Rishi Sunak is expected to extend the stamp duty holiday until the end of June to boost the property market and remove uncertainty around property transactions. The stamp duty holiday was due to end on 31st March 2021 leaving 100,000 ongoing property transactions at risk of not completing in time.
The Law Society urged the government to extend the deadline due to fears of buyers missing the deadline and withdrawing their offers. As many people are currently trying to take advantage of the tax holiday, this has caused delays and backlogs in the buying and selling process. The three-month extension may help all those involved in the home buying process to catch up with the backlog of transactions and it is estimated the extension could benefit 300,000 property purchases in England.
The new threshold for stamp duty exemptions
Previous to the Stamp Duty Holiday announced in 2020, the threshold for stamp duty exemptions applied to properties worth up to £125,000. In July 2020, the Chancellor increased the threshold to properties costing between £125,000 to £500,000 until 31st March 2021. It is now expected the holiday on stamp duty on the first £500,000 of property purchases in England and Northern Ireland is to be extended until the end of June 2021.
Importance of the property market thriving
The government has stated that the housing sector is one of the most important sectors in creating new jobs. The construction sector brings £39 billion into the economy and the housebuilding sector supports approximately 750,000 jobs.
In May 2020, the government reported a 50% decline in property transactions and a decrease in house prices for the first time in 8 years. The Chancellor believes the property market must thrive in order to help the UK economy recover from the impacts of the pandemic by creating jobs and encouraging economic growth.
Has the stamp duty holiday boosted the property market?
The Guardian reports an 8.5% increase in house prices in 2020 and north-west England has seen the highest rate of growth with an 11.2% increase in 2020. These figures suggest the stamp duty holiday may have led to a surge in property transactions and house prices.
Additionally, data from Experian shows a 12% increase in mortgage applications in February 2021 in comparison to the same period in the previous year. They also predict a boost in the mortgage market if the stamp duty deadline is extended.
When will the extension be confirmed?
The chancellor is expected to announce the extension in the new budget on 3rd March. However, it is not yet clear if the extension will apply to all purchases, or would be on a staggered basis and apply just to those agreed before a certain date.
If you are thinking of buying a house and taking advantage of the stamp duty holiday, use our calculator to find out how much your conveyancing will cost for your purchase.Get a quote online