Stamp Duty Holiday Extension Announced
Chancellor Rishi Sunak has announced the stamp duty holiday will be extended for a further three months until the end of June.
The extension, which will apply to all buyers, means people in England and Northern Ireland will not have to pay stamp duty on the first £500,000 of property if they complete – in other words, legally transfer ownership – before June 30.
To avoid a ‘cliff edge’ at the end of this period, stamp duty will not be charged on the first £250,000 of a property purchase between 1 July and 30 September.
The threshold for the nil rate band will then fall back to £125,000 on 1 October.
The extension of the holiday means nine out of 10 people buying a property will not have to pay stamp duty, saving them an average of £4,500 each and a maximum of £15,000 for those purchasing a home costing £500,000.
Richard Donnell, research director at Zoopla said: “The stamp duty extension to June means a further 234,000 buyers who have already agreed a sale will save an estimated £987m on stamp duty.
“And those who agree a sale from now will be guaranteed savings of up to £2,500 as long as they complete before the end of September.
“This will take 46% of homes out of stamp duty until the end of September. This removes a major cost from moving home that hits hardest in southern England where the mortgage guarantee is less effective.”
Why has the stamp duty holiday been extended?
The Chancellor announced the stamp duty holiday in July 2020 to help kickstart the housing market in England and Northern Ireland following the first national lockdown.
The tax break, combined with many people carrying out a ‘once-in-a-lifetime’ re-assessment of their housing needs in the face of the pandemic, triggered a mini home buying boom.
But the steep spike in housing transactions led to a congested sales pipeline and the home buying process taking longer than usual.
We estimated that around 70,000 people who agreed sales in 2020 were in danger of missing the 31 March deadline.
And a petition calling for the stamp duty holiday to be extended received more than 100,000 signatures, triggering a debate to be held in Parliament in February.
Can you still buy a home before the stamp duty holiday ends?
Yes, hundreds of thousands of buyers who have already agreed a sale with little or no expectation of making stamp duty savings will benefit from the Chancellor’s three-month extension to the main stamp duty holiday.
Buyers who are now looking for a new home could benefit from the full savings of up to £15,000 if they complete their sale within less than four months.
But all buyers who enter the housing market within the following months are very likely to save up to £2,500 if they finalise their purchase by the end of September.
Donnell explained: “Some 234,000 sales have been agreed since mid-December, with one in five of these transactions in the south east of England.
“Buyers in the south east will make savings of £271m. Total savings across the country, allowing for four months between sale agreed and completion, is around £987m.”
If you’re looking to take advantage of the stamp duty holiday, you’ll need to have your ducks in a row well before it ends.
The time it takes between agreeing a sale and completing is normally around 90 days.
But our research shows that the average time for a sale to cross the line is now just under four months – around a fortnight longer than normal.
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