The stamp duty holiday has been extremely successful since it was introduced in July last year. Combined with the release of pent-up demand after the first national lockdown, it helped encourage buyers back to the market. Although times have been uncertain, the savings afforded by the stamp duty tax break helped to fuel buyer demand. While the economy rejoiced, industry professionals soon began to feel the pressure. The spike in cases created a bottleneck, making it harder for professionals to push transactions through to completion. As a result, delays have been incurred throughout the process. An area that has been heavily affected is local authority searches. This led the thousands of buyers hoping to complete before the end of the original stamp duty holiday deadline to call for an extension from the Government.
An extension of the stamp duty holiday has been confirmed.
During the Spring Budget meeting, Chancellor, Rishi Sunak, confirmed a three-month extension of the stamp duty holiday. This takes the deadline from 31st March to 30th June 2021, where the £500,000 nil-rate band will end. He went on to introduce a subsequent tapering of the new deadline, with the nil-rate band dropping to £250,000. It will return to the usual level of £125,000 on 1st October. The news has been welcomed by the industry, giving more movers more time to benefit from the savings and keep the market moving.
How will buyers be affected by the extension of the stamp duty holiday?
As the market breathes a sigh of relief, many home-movers now stand to benefit from the savings. For the thousands of cases currently underway, the extension of the stamp duty holiday gives them more time to complete. The market may have decelerated in the wake of the announcement, but demand is expected to rise shortly. London and the South East are expected to see a particular increase, in line with reports that these areas stand to benefit most. Although purchasers should keep in mind that new cases are less likely to get the full benefit, the tapering can still provide essential savings to many.
What will happen to the delays with local authority searches?
Numerous homebuyers have encountered severe delays with local authority searches during their purchases. While the stamp duty holiday was great for encouraging buyers back to the market, the result for local authorities has seen them inundated with search requests. Due to restrictions adopted in response to COVID-19, turnaround times are taking longer. Combined with the excess of cases, lengthy delays have been incurred. However, there are no clear signs as to how councils and local authority searches will be affected. Although the market has shown signs of slowing down following the announcement, cases are expected to rise again in the coming weeks.
What does the extension of the stamp duty holiday mean for the market moving forward?
The extension and successive tapering of the stamp duty holiday have been well-received throughout the industry. Although there were previous concerns for a “cliff-edge” in the market as the result of a hard deadline, the tapering has helped alleviate those fears. As a result of the extension, thousands of cases that risked falling through before the 31st March deadline have a new confidence. As demand is expected to pick up again in the coming weeks, new transactions are being urged to proceed cautiously. As completion before the extension deadline may be unrealistic for new cases, the tapering could still provide some essential savings.
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