The government is publicly signposting that the stamp duty holiday won’t be extended past the end of March, which is a blow to those who are hoping to meet that deadline.
The holiday raised the minimum threshold from £125,000 to £500,000 in England, resulting in a rush to buy properties in recent months.
However this rise in demand, combined with the impact of the pandemic, has seriously slowed down the process of buying a home.
Parties involved in the mortgage process, like mortgage lenders and solicitors, are now taking so long to process mortgage applications that buyers starting now likely won’t be able to benefit from the stamp duty holiday, if experts are to be believed.
What’s been said
An official petition was tabled at the government, which requested for stamp duty to be extended for an additional six months, given the current situation.
But the government tersely responded: “The SDLT holiday was designed to be a temporary relief to stimulate market activity and support jobs that rely on the property market.
“The government does not plan to extend this temporary relief.
“SDLT is an important source of government revenue, raising several billion pounds each year to help pay for the essential services the government provides.”
What this means
Buyers who are dipping into the market now are being instructed that they won’t be able to benefit from the stamp duty holiday.
This could put some people off, especially as heightened demand has caused house prices to spike in recent months.
That’s not to say that it’s impossible to get a good deal. In this climate, as a buyer you could use the situation to haggle with sellers on price, given that you’re likely to have to spend thousands on taxes.
If you’re a first-time buyer, you should know that the stamp duty rules are kinder to you in normal times, even if you can’t benefit from the holiday.
Even before the stamp duty holiday was introduced, first-time buyers were entitled to stamp duty relief on properties worth up to £300,000, on properties worth up to £500,000.
Therefore your tax bill shouldn’t see as big a jump as some of the other buyer types.
Despite the current situation, it’s still not impossible that things could change.
The current government has a history of U-turns in response to public backlashes.
Some notable examples are two last-minute extensions to the tenant eviction ban, as well as non-property issues like the A-Level exam results fiasco, as well as the PR disaster caused by Marcus Rashford’s free school meals campaign.
Given what’s gone before, if enough people are outraged that they are being asked to pay thousands of pounds more on stamp duty than they expected – which could also result in a breakdown of transactions – it wouldn’t be out of character for the government to introduce some sort of extension at the 11th hour.
We’ll have to wait and see on that, but clearly you shouldn’t get your hopes up on being able to benefit from the stamp duty holiday.