In his Spring Budget announcement for 2021, Chancellor Rishi Sunak (pictured) has confirmed that the stamp duty holiday will be extended until 30 June.
The stamp duty holiday, introduced in July 2020, raised the tax threshold to £500,000, providing savings for homebuyers of up to £15,000.
The industry has continuously drawn attention to the danger of a cliff-edge when the measure comes to an end on 31 March 2021, with backlogs across the property sector causing many transactions to face falling through if unable to complete in time.
In the lead up to the Budget various suggested measures were rumoured, including a six-week extension only for those already in the homebuying process, and a three month extension of the scheme as it stands now.
In order to allow those transactions facing collapse due to the backlogs, the holiday up to £500,000 will remain in place until 30 June.
Then, in order to “smooth the transition back to normal”, Sunak revealed that the threshold would be reduced to £250,000 until the end of September, only returning to the usual level of £125,000 from 1 October.
Sunak said: “The cut in stamp duty has helped hundreds of thousands of people in buying a home.
“Due to the sheer volume of transactions, many new purchases won’t complete in time for the end of March.”
Michelle Andrews, head of buying a home at HSBC UK, said: “The temporary relief of Stamp Duty Land Tax has made a real difference to customers and the mortgage markets during this very challenging time.
“We welcome the extension of the temporary relief and believe it will help continue to give opportunities to more customers to achieve their dream of owning or moving home as well as keeping momentum in the housing and mortgages markets.”
Matthew Tooth, chief commercial officer at LendInvest, reacted to the news:”It is welcome news to see the Stamp Duty Land tax deadline extended in the Chancellor’s Spring budget today.
“This extension will not only alleviate a lot of the mounting pressure that is currently on lenders, but also conveyancers, intermediaries and other professionals involved in property transactions.
“Since the initial announcement of the stamp duty holiday, the housing market has been booming with a record volume of deals, which has certainly been felt at LendInvest.
“This extension will provide ample fuel for this to continue, as the country navigates its way out of a pandemic triggered recession.
“We can expect this decision to have a positive effect on house prices.
“Last year we saw a six-year high for residential price growth at 7%, partly driven by the first Stamp Duty holiday implementation by the Chancellor.
“Whilst previous analyst expectations for 2021 predicted stable growth of between 1% – 1.5%, combined with the highly successful vaccination drive in the UK, we can now expect higher growth for the market over the next quarter.”