Calls to extend the stamp duty holiday mount as England is plunged back into nationwide lockdown...
Extension support comes amidst potential cooling of the housing market in 2021
Calls for an extension to the stamp duty holiday have mounted following the PM's announcement yesterday that England is heading back into a full nationwide lockdown.
The stamp duty holiday means homebuyers across England and Northern Ireland pay no stamp duty when purchasing homes up to a value of £500,000, with a reduced rate for homes above that. For someone buying a £500,000 property, the saving is worth £15,000. The end of the holiday on 31 March 2021 will bring about a cliff edge in demand, alongside fallout from Brexit and Covid. Furthermore, forecasters have predicted a rapid downturn in the housing market in 2021, with the stamp duty holiday set to expire and unemployment likely to rise when the furlough scheme ends in April. This has overwhelmed conveyancing, surveying, mortgage and search services, with Rightmove's data shows a logjam of 650,000 properties changing hands, many of which will not complete before the end of the stamp duty holiday.
David Hannah, Founder and Principal Consultant of Cornerstone Tax, discusses why the government needs to review the upcoming stamp duty holiday deadline, to prevent the cliff-edge of those who believe they will benefit from missing out, and to soften the drop in demand:"It is critical that the government reviews this stamp duty holiday, and either announces an extension or amends the tax payment date so that homebuyers can still take advantage of the holiday even if they cannot complete by 31st March. The most preferable option would be a phasing out of the holiday, to avoid those who are currently in the process of purchasing their properties, essentially being thrown off a cliff-edge.
Especially now that the country is being plunged back into another full lockdown, more must be done to help people get on the property ladder and give the market some security in what will be a very turbulent few months.
Government-backed purchase mortgage guarantees for borrowers would be a great way to reinstall confidence in the lending market. If the term of these guarantees were for five years, for example, the inflation of the housing market during the medium term would wipe off any negative equity on those properties."