The UK chancellor, Rishi Sunak, is reportedly set to extend the stamp duty holiday, which would be “a big win” for both homebuyers and the property industry, according to David Hannah, Cornerstone Tax’s founder and principal consultant. The current end of March deadline means that around 100,000 of Britain’s homebuyers will miss out on the benefits of not having to pay the stamp duty tax, despite agreeing to purchase homes in the third and fourth quarters of 2020, when the tax holiday was allowed.
David Hannah, Cornerstone Tax’s founder and principal consultant, said: “This news is a big win for the property industry and homebuyers, especially given that without it, thousands of purchases could fall through and many will pause their plans to buy houses, as our research shows. The approaching end of the stamp duty holiday is already having a profound effect on the property market, sale collapses are approaching record highs and solicitors and conveyancers are already reporting that they expect to see a considerable drop in demand very soon.”
According to property analysts Twentyci, one in five of the 457,358 purchases made subject to contract at the end of 2020 are likely to fall through, while 31,250 of the 125,000 sales agreed in January will likely be abandoned due to the tax, resulting in a huge loss for homebuyers, sellers and service providers. Research from property tax specialists Cornerstone Tax also shows that 37% of potential house buyers will not buy in the near future if the stamp duty holiday ends in March.
David added: “While calls to make the holiday permanent, or scrap the tax altogether, seem unrealistic given the levels of public debt and the £12bn tax take it generates each year, this extension will delay the strict cut-off point, but the new date is a temporary fix to the issue. Raising to the nil-rate band, to somewhere around £300,000, will benefit the majority of buyers without affecting a large amount in tax revenues, which is obviously key to the recovery of public finances. These statistics demonstrate the importance of keeping the market moving to other sections of the economy and first-time buyers, those likely to spend less than £300,000, are the driving force behind this movement.”
