Conveyancing professionals have warned property buyers that they risk missing out on the recently introduced “stamp duty holiday” because of increased pressure experienced by the industry, created, in part, by the introduction of the Stamp Duty Holiday.
Estate agents are requesting that the government extend the current stamp duty holiday by at least six months. This comes as buyers rush to beat the 31 March deadline.
If you buy a home in England or Northern Ireland costing more than £125,000 (or more than £40,000 for second homes), you usually have to pay Stamp Duty Land Tax (SDLT) to HMRC. This applies to both freehold and leasehold properties and whether you are buying outright or using a mortgage. Different rules apply for first time buyers.
If you buy a property in Scotland you usually pay Land and Buildings Transaction Tax (LBTT) and in Wales: Land Transaction Tax (LTT) rather than Stamp Duty. Our residential stamp duty calculator for UK property will help you work out normal SDLT rates.
There Are Several Rate Bands For Stamp Duty
The tax is calculated on the part of the property purchase price falling within each band.
For example, if you buy a house for £275,000, the Stamp Duty Land Tax (SDLT) you usually owe is calculated as follows:
· 0% on the first £125,000 = £0
· 2% on the next £125,000 = £2,500
· 5% on the final £25,000 = £1,250
However, due to the recent upheaval in the property market caused by Covid-19, the Government has introduced SDLT exemptions on Properties under £500,000.
In July, Chancellor, Rishi Sunak unveiled a massive stamp duty cut in a bid to boost the housing market after lockdown restrictions were eased. Raising the threshold at which buyers have to start paying stamp duty from £125,000 to £500,000, the reuptake of the property market and the introduction of the tax break led to the number of property transactions rising and prices increasing dramatically.
The UK housing market took off rapidly in May, with conveyancers reporting a rapid reuptake in demand with buyers aiming to complete within the nine-month stamp duty holiday announced in July.
You are free to move home. However, we advise you to compare estate agents as the process of searching for and moving into a new home is different. The best estate agents, conveyancers and other professionals will have modified how they work to accommodate the pandemic.
Lobbying The Government
Many industry bodies, including estate agencies and conveyancing firms, have been lobbying the government to extend the stamp duty holiday on behalf of both consumers and the property sector.
The trade body ‘Propertymark’ has reiterated its call for agents to support its campaign in order to get an extension to the Stamp Duty Tax holiday deadline to help avoid what it fears would be “transactions falling through, price falls, and a sudden loss of momentum in the market”. Propertymark are among a group of industry professionals to send a letter to chancellor Rishi Sunak calling for “urgent action”.
The letter insists that failure to complete transactions by 31 March 2021 could see the breakdown of property sale chains and consumers financially unable to continue with their purchases as they would have to find further funds to pay stamp duty.
The recent property boom caused by the stamp duty holiday has been massively beneficial for the housing market. However the end of the exemption, due on March 31st, could cause thousands of sales to fall at the final stages which would have a drastic knock-on effect on the housing market, which has recovered well from the Covid slump.
Estate Agents are calling on the government to rethink the timings of the exemption so that pressure on the system can be released, allowing transactions to reach completion and avoid a distressing period for home buyers/sellers.
After a much hoped-for extension to the current stamp duty holiday deadline disappointment ensued after it failed to materialise in the chancellor’s spending review. The spending review focused more on funding for public services in light of the Covid-19 pandemic, even though the property industry had anticipated that the chancellor would use the address to provide clarity on issues such as the stamp duty holiday and proposed changes to capital gains tax.
An extension to or even a gradual tapering off of the stamp duty holiday would help consumers to avoid missing out on significant tax savings. The pressure on property professionals would also be greatly reduced. Extra time would also help the industry work through an increasing backlog of transactions built up over recent months.
What’s more, an extension to the stamp duty holiday would help support the housing market throughout 2021 when it will be facing further tough economic conditions.