Stamp duty extension ‘a huge relief to buyers stuck in transaction logjam’

The threshold will not return to its usual level of £125,000 until October.

People looking in an estate agent's window
People looking in an estate agent's window

An additional 300,000 transactions in England could benefit by the end of June from the stamp duty extension announced in the Budget, according to estimates.

Within minutes of the extension being announced, there were signs of house hunters rushing to see the properties available online.

Property professionals said the announcement will be a “huge relief” to those who had been stuck in transaction bottlenecks, saving them thousands of pounds.

Introduced last July, the stamp duty holiday had been due to end on March 31, but it will remain until the end of June and then there will be a “tapered” period running until September.

Chancellor Rishi Sunak announced the Government will maintain the temporary increase in the “nil rate” stamp duty band at £500,000 in England and Northern Ireland until June 30.

From July 1, the nil rate band will reduce to £250,000, until September 30.

It will then return to its “normal” threshold of £125,000 from October 1.

Rightmove said an additional 300,000 property transactions in England could get through by the end of June and buyers could save £1.75 billion in total.

It also estimated 45% of transactions in England will still be exempt from stamp duty in the tapering period.

The property website said that within half an hour of Mr Sunak’s announcement, use of its mortgage calculator jumped by 85% and overall traffic to Rightmove rose by 16%.

Sean Hallewell, 54, moved back to Bournemouth last summer after losing his job as a pilot in Mauritius and is selling his property in the seaside town so he can buy a smaller home and continue to live off savings.

He has a buyer for his home but it did not appear the deal and his new purchase would be completed in time for a March deadline.

Hr told the PA news agency: “With great relief, this is welcomed… my industry has been decimated, the savings pay the bills for a few months.

“For us it’s not about contributing to our ‘wealth’, rather it’ll be throwing us a lifeline until I can get employment.”

Rightmove property expert Tim Bannister said: “This three-month extension will come as a huge relief for those people who have been going through the sales process since last year and were always expecting to make use of the stamp duty savings.

“Our recent data shows one in five sales that were agreed in the same month the stamp duty holiday was first announced in July last year still haven’t completed, so this additional time will make a big difference to help those stuck in the logjam complete their purchase in time before the new end of June deadline.”

Richard Donnell, research director at Zoopla, said: “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.”

Zoopla said buyers in the South East, where house prices are often higher than average, are particularly likely to benefit from the extension.

Some commentators called for a more long-term overhaul of stamp duty.

Matthew Pratt, Redrow chief executive, said: “For a functioning housing market people have to move up and down the ladder, and the need to find significant sums of money can prevent those at the top of the property ladder from moving to a more appropriate home for their requirements, and freeing their current larger property up for a family.

“Sideways moves are often crucial for people who might be moving away for job or life stage changes, and the current stamp duty levels can stifle a choice which can massively improve people’s lives and open up options.”

Nitesh Patel, strategic economist at Yorkshire Building Society, said: “The hard stop scheduled at the end of September may just kick the can down the road for some buyers.

“Those who are mid-transaction may well face a similar situation of being confronted with an unexpected tax bill of thousands of pounds when the extension comes to an end, as well as disincentivising higher-value purchases.

“If the lowest stamp duty price threshold had been raised in line with house price inflation, no stamp duty would be paid on properties up to £195,000.

“This has disadvantaged those looking to move home to accommodate growing families, who have had to pay comparatively higher levels of tax, compared with 15 years ago, to purchase a similar property.”

Tom Moran, a partner at Charles Russell Speechlys, said: “This chopping and changing underlines the need for a proper reform of stamp duty so buyers and sellers can plan ahead with certainty.

“This extension of an artificial deadline merely defers the stress to sellers and buyers, and the pain of the tax going back up. High transaction costs act as a block to housing mobility and punish both sellers and buyers.”

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