Chancellor Rishi Sunak will extend the stamp duty holiday deadline until the end of June - a three month extension.
The lead story in The Times 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. The article is written by the newspaper’s well-connected political editor Steven Swinford.
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
The Times also says the Budget next week will see the extension of the furlough scheme for up to another three months - it was due to end on April 30.
Swinford's article also suggests the Chancellor will commit to raising Corporation Tax over the duration of the current Parliament, which still has almost four years to run. The increase could ultimately be from today's 19 to an eventual 25 per cent, the newspaper says, adding that the new US treasury sectretary is also using a rise in corporation tax to help fill the fiscal black hole caused by Covid spending.
The business rates holiday for retail, hospitality and leisure sector will also reportedly be extended, along with the VAT cut for hospitality and tourism.
No mention is made in The Times article about Capital Gains Tax, which has been the subject of speculation in recent weeks following an Office of Tax Simplification report last year urging increases to bring it more into line with income tax.
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If this is accurate and there is going to be a three-month stamp duty holiday extension, with no kind of tapering or grandfathering scheme built in, it may assist many who are currently buying and selling and won’t make the 31st March deadline. However, it is likely that a whole new batch of buyers and sellers will be in the same situation in the summer, unless some hold off because of the reported property price increases over the last 12 months, hoping for a post summer drop.
It also won’t help the already creaking (and in some cases almost on its knees) property industry; including agents; conveyancers, surveyors, lenders; local authorities and removers.
Hopefully, the Chancellor will heed the requests made by many over the last few months that a soft (petering out) landing, rather than a cliff edge landing, would be a more desirable and practical. Extension or no extension.
“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.”
The position of cash buyers would also need to be built into the above suggested solution.
I seriously hope this is not just a 3 month extension. If it is then it is a very short sighted move and will mean the last few months of stress pushing completions through to beat the deadline will have been for nothing only for anther one in 3 months. I am hoping a sensible approach will be taken with some kind of tapered approach or perhaps only extending to transactions which are substantially progressed otherwise it will encourage a whole new set of buyers and a new cliff edge. Good for the economy but bad for conveyancing!
There is a simple solution
Just allow buyers who have agreed a sale BEFORE 31/3 to continue to take the advantage of the "holiday"
We set up a mechanism whereby our sales memo along with confirmation of instructions by the vendors lawyers is taken as "proof" of agreement of sale
Iy can be backed up with a contract being issued if possible and/or connection between the lawyers to "set the date"
Anything agreed after 31/3 would not qualify
I have heard people suggest this cannot be policed and open to abuse
I cantt see why anyone would try and abuse it. You are hardly going to pretend you are buying house to get the holiday .... are you?
Now is the time for agents to look at their processes to avoid just another glut of transactions being disgruntled. There is so much more that can be done to speed up transactions. When a client takes the phrase Get Legally Prepared seriously and their agent understands what it means, the transaction is set up to exchange far quicker.
If the industry does not change, nothing will improve.
There has to be a tapering. I think it's absolutely right that there is an extension to avoid a cliff-edge, but as others have said you risk simply creating a new one.
Would seem more sensible to say anyone already involved in a transaction by the time Sunak announces the measure next week can use the stamp duty holiday whenever they complete, but anyone who starts their transaction after March 3 can't. Or something along those lines.
Why 3 months? This just shifts the pressure on another 3 months with all the January and February buyers suddenly realising hope of saving £££s which they knew they wouldn't have been when offering. Surely a 4-6 week extension is all that's required as this would dilute the pressure of the legals and the logistics of the removal companies. Can we get some common sense at the top please?
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