The campaign for a stamp duty holiday extension has been gaining significant momentum for months now, and finally seems to have achieved its goal with a story in The Times suggesting that the holiday will be extended at the upcoming Budget on March 3.
The Chancellor Rishi Sunak has faced huge pressure from all corners – including MPs of all stripes, trade bodies, the public, estate agents and conveyancers – to extend the holiday he introduced in July last year to avoid a potentially damaging cliff-edge scenario.
And now a lead story in The Times, penned by the paper’s well-connected political editor Steven Swinford, has revealed that Sunak will extend the stamp duty holiday deadline by three months until the end of June.
This follows a fierce campaign by agents, the public, property commentators and economists, in an effort to avoid thousands of transactions missing out on the deadline.
It isn’t yet clear whether the extension is three months for all current and new buyers of homes up to £500,000 – which would effectively kick the can down the road and potentially create a new cliff edge in June – or a ‘tapered’ extension applying only to current buyers already in the pipeline.
The extension precisely matches the length advocated by the Building Societies Association (BSA) before the Times article went live.
The BSA argued that, with the March 31 deadline fast approaching, many buyers and sellers – who have already agreed sales and have mortgages approved – would be unlikely to complete the transaction before the deadline hits.
As such, it called for a tapered end that would enable any house purchase where the mortgage approval has been granted by the end of March to receive an additional three months to complete while still benefiting from the tax savings.
The association said that, as well as supporting buyers who are likely to have budgeted based on stamp duty savings, a taper of three months would also allow lenders and conveyancers to manage operational pressures in a Covid-secure way.
What impact could the extension have?
Reacting to the strong indications that the stamp duty holiday will be extended to the end of June, Rightmove has outlined the possible impacts this could have.
The portal estimates that an extra 300,000 property transactions in England could benefit from the tax saving, based on previous HMRC data. If this additional 300,000 transactions made it through, buyers could save £1.75 billion in total.
Based on the current sales that have been agreed in England, 80% would pay no stamp duty due to the extended holiday.
Rightmove says there are an estimated 628,000 sales in total still currently in the legal process across Britain, including those that were agreed last year and those that have been agreed so far in 2021.
At present, Rightmove estimates that 100,000 buyers who agreed a purchase last year are set to lose out if the deadline stays as March 31.
Stamp duty holiday – what is the background?
Sunak introduced the stamp duty holiday during his summer economic update last July – and the savings came into place immediately. Since then, a wide range of buyers – from second-steppers to buy-to-let landlords and holiday home owners – have taken advantage of the savings on offer, which have been considerable in some cases.
Sellers, meanwhile, have benefitted from increased demand as a result of the stamp duty holiday, as interest in property has soared in a market that was already booming as it exited the first lockdown last summer.
But, even right from the start, some people were calling for steps to be taken to avoid a dramatic cliff-edge at the end of the March, and the momentum behind an extension or tapering has grown ever stronger in the last six months or so.
To the point where a group of influential Tory MPs were calling for an extension, alongside a petition to extend the stamp duty holiday for an additional six months, set up by a member of the public and (as of now) containing more than 150,000 virtual signatures. When it breached the 100,000 mark, it triggered a parliamentary debate, which was held virtually on February 1 and was remarkable for the cross-party agreement on calling for an extension.
Since that point, the pressure has grown from the public, MPs, agents, trade bodies and others, with the campaign receiving cut-through in a way that few others manage.
Now it seems the government has listened, but there will still be question marks about whether a further three-month extension will simply lead to another cliff-edge.
When will we know more?
We’ll have to wait until Wednesday 3 March for confirmation of the Chancellor’s plans, and whether any tapering will be involved. But campaigners will be delighted that they have managed to convince the government to extend the holiday and, for now, avert a cliff-edge scenario.
Depending on what is announced, there will doubtless be further pressure on the government to extend it further or provide some kind of cut-off point for transactions – after which people can no longer be eligible for the holiday – to offer more clarity to the industry.
The three-month extension will certainly provide breathing space for the agents, conveyancers, surveyors, lenders and removal firms who help transactions to pass through the system smoothly, while the stats suggest that a significant number of buyers will be helped as a result of the change.
All eyes remain on Sunak’s Budget speech, but the industry can seemingly pat itself on the back for now that a multi-pronged campaign has proved so successful.
Here at Oakfield Estate Agents, we will do all we can to help you sell your home successfully, and keep you updated with all the latest stamp duty announcements and what they mean for the market and your sale.
If you are buying and selling at the same time – as many do – you may also be interested to know how much you could save as a result of the stamp duty holiday.
For further information on how to manage the sales process, please get in touch with us today. You can also request a free instant online valuation to see how much your East Sussex property could be worth in the current marketplace.