Rishi Sunak 'to extend stamp duty holiday'

The Times has reported today that chancellor Rishi Sunak plans to extend the stamp duty holiday until the end of June. The lead story this morning says the extension - following a fierce campaign by agents, property commentators and economists - will be announced in the Budget on Wednesday of next week. 

What isn't clear is whether the extension is three months for all current and new buyers of properties up to ￡500,000 - thus creating a new cliff edge - or a 'tapered' extension only for current buyers.

The extension is precisely the same length advocated yesterday by the Building Societies Association. The BSA says that with the March 31 cliff edge deadline fast approaching many buyers and sellers, who have already agreed sales and have mortgages approved would be unlikely to complete the transaction within the deadline. 

The BSA believes that a tapered end would allow any house purchase where the mortgage approval has been granted by the end of March, an additional three months to complete while still benefiting from the rate reduction. In addition to supporting homebuyers who are likely to have budgeted based on the Stamp Duty saving, a taper of that length would also ensure that lenders and conveyancers could manage operational pressures in a Covid-secure way, the association believes.

A new report by the Centre for Policy Studies looks at the effects of the measure introduced by the Chancellor in response to the pandemic. Within this report it finds that after an initial sharp decline in sales between April-June 2020, the number of transactions increased from 132,090 in Q2 to 225,870 in Q3. With the number of transaction rising to 316,300 by the end of Q4. The highest level since before the global financial crisis in 2007/8.

The think tank’s research shows that stamp duty revenues actually rose by 27% in Q3 compared to Q2, from ￡1.1bn to ￡1.35bn. Predictions suggests that they will rise again in Q4 given the continued increase in transactions.

The CPS is calling on the Government to either permanently increase the threshold on primary residences to ￡500,000 or abolish the tax outright. The headline cost of keeping the threshold increase alongside the CPSs’ proposed reform to the rates would be around ￡3 billion. However, the think tank estimates that it would actually cost just ￡500 million. This takes into consideration the wider economic benefits. In addition, boosting new build construction by at least 20,000 homes per year. As well as helping homeowners and the economy adjust to the changes brought about by the pandemic.

Rightmove have been crunching the numbers on the back of this latest rumour to see what effect it could have. According to data, the portal estimates an additional 300,000 property transactions in England could benefit from the tax saving. This is based on previous HMRC data. If an additional 300,000 transactions made it through, buyers could save ￡1.75bn in total. Based on the current sales that have been agreed in England, 80% would pay no stamp duty because of this holiday. There are an estimated 628,000 sales in total still currently in the legal process across Great Britain. Including those that were agreed last year and those that have been agreed so far this year.

Looking to sell and make the most of the stamp duty saving? Early indications are that we will get an extension in the saving to the end of June

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