According to a report by The Times, the UK government is planning to extend the stamp duty holiday by three months. The scheme that was initially set to expire on 31 March will supposedly see its deadline moved to the end of June.
Here’s more on this developing story.
What is stamp duty?
Stamp duty is a tax that you pay if you buy a property or land over a certain value in England and Northern Ireland.
You do not pay stamp duty on property with a value of up to £125,000. You pay 2% on the portion between £125,000 and £250,000 and 5% on anything between £250,000 and £925,000.
The rules are a little different for first-time buyers. You do not pay stamp duty for a property with a value of up to £300,000. For the portion between £300,001 and £500,000, you pay stamp duty at 5%.
For properties worth more than £500,000, you pay the same rates as other buyers.
How does the stamp duty holiday work?
The stamp duty holiday was introduced by the government in June 2020. The aim was to give a much-needed boost to the housing market that was faltering due to the coronavirus pandemic.
Currently, instead of the usual £125,000 threshold, buyers do not pay any stamp duty on properties worth up to £500,000. This provides buyers with a chance to save as much as £15,000 in stamp duty charges.
The stamp duty holiday has had a positive impact on the property market. Reports suggest that house sales in the UK have increased to their highest level since before the 2008 financial crisis.
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House prices in the country have also surged by their biggest margin in six years.
Why extend the stamp duty holiday?
The potential extension of the stamp duty holiday comes after experts warned that up to a third of all house sales were at the risk of falling through if an extension was not granted.
Lockdown has resulted in severe delays in completing transactions. There are fears that with transactions not being processed quickly enough, those sales still in the works might not be completed before the stamp duty holiday officially ends.
A survey by The Guild of Property Professionals found that thousands of buyers will pull the plug on their house deals if the government fails to extend the stamp duty holiday.
A massive 31% said they would very likely cancel their deal if they had to pay stamp duty. A further 43% said they would most likely do the same.
What could the extension mean for buyers?
Many buyers have been scrambling to complete their transactions before the 31 March deadline. They’re worried that if they don’t, they could be left with a significant tax bill.
With news of a potential extension of the deadline, buyers can perhaps breathe a sigh of relief. A three-month extension to the stamp duty holiday would give them time to complete purchases held up by the pandemic.
And in more good news, the government has also extended the deadline for another scheme.
The Help to Buy Scheme that helps first-time buyers get a property with just a 5% deposit has seen its deadline pushed from 31 March to the end of May. This gives buyers who hope to use the scheme two extra months to complete their house deals.
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