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Stamp duty payment holiday

Stamp duty payment holiday - what does it mean for you?

What is the Stamp Duty Holiday?

When buying a property, homeowners would normally have to pay something called Stamp Duty Land Transaction Tax on all properties that are sold for over £125,000 - or £300,000 for first-time buyers.

In July 2020, in light of the current Coronavirus pandemic, the Chancellor of the Exchequer Rishi Sunak announced a temporary 'stamp duty holiday'. This took the rate of the existing stamp duty down to 0% for all properties that were valued and purchased at £500,000 or under - until the closing date of 31 March 2021.

How has this benefited some?

If before the stamp duty holiday you had purchased a property that was valued and purchased at £500,000, the stamp duty would have been £15,000 or £10,000 for first time buyers. Now, until March next year, you will pay £0. This is a huge saving!

This holiday applies to all residential properties, although second-home buyers will still have to pay 3%.

What impact has this had on the property market?

The market has experienced huge changes from the announcement of the stamp duty holiday. Firstly, with shares; share prices of some of the UK's largest housebuilders started to rise after a turbulent first quarter: industry analysts have stated that some were noted to experience an increase of up to 10%.

Sales rocketed. Because the scheme is temporary, ending on 31st March 2021, this has meant that buyers have acted quickly; some bringing forward their decision to purchase by a few years. Rightmove had experienced a share price dip of 15% since early 2020, but the day after the Chancellor's announcement, the popular listings site experienced a record busy day with over 8.5 million visitors. This will hopefully equate to future sales.

To put it plainly, the stamp duty holiday announcement has put the British property market into a real spin. This includes a positive turn for construction companies, developers, estate agents, conveyancing solicitors and online property services. It was announced that between the first day of the stamp duty holiday and the first week of August, the number of sales for properties valued under £1.5 million had increased by an overwhelming 146%.

Will the deadline be extended?

Currently, the housing industry is asking the government to extend the stamp duty by a further six months. This is to give homebuyers who are racing to get their sales over the line before the deadline of 31 March, the breathing space to allow them to complete.

As yet, the government hasn't announced any details about extending the stamp duty holiday beyond March. Housing minister Christopher Pincher said in the House of Commons at the beginning of November: "the government does not plan to extend stamp duty relief, and will continue to monitor the property market."

But there is a setback to this. It takes the average homebuyer just over 120 days to purchase a home. If the stamp duty holiday scheme in March, this leaves prospective homebuyers only until November 29 to find a property and start proceedings.

What happened if it isn't extended?

If there is no extension of the stamp duty holiday, many sales could fall through, and although the housing market seems to have recovered from the Covid-19 slump, it could have a reverse knock-on effect and regress to where the market was in May.

Restrictions from the second lockdown have now seen another backlog of conveyancing in the run up to Christmas, with homebuyers suffering delays and nothing to do but wait. Trying to 'hurry along' the procedures can even lead to mistakes and details missed, which could delay the process even further.

How can you speed up the process?

Have as much information ready as you possibly can before you undertake the conveyancing process; buying details, selling details, mortgage financing, house clearing, etc. - and either hope for a speedy transaction or hold out for an extension.

Either way, this is an exciting time for homeowners.

For further help or advice with your move, please contact our offices.

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