House buyers breathed a sigh of relief when Rishi Sunak announced an extension to the stamp duty holiday in his Spring Budget.
However, for those at the start of the process, can you still benefit? And is there a chance the stamp duty holiday could be extended further? Let’s take a look.
How long is the stamp duty holiday extension?
The stamp duty holiday was originally introduced in July 2020. It meant that buyers would not have to pay property tax on the first £500,000 of all house purchases in England and Northern Ireland. This could equate to a saving of up to £15,000.
The holiday was due to end on 31 March 2021. But many buyers were experiencing delays with their property transactions. This was as a result of the latest lockdown and a huge demand for conveyancing services.
Therefore, it was a relief to many that the chancellor announced a three-month extension to the stamp duty holiday. It will now end on 30 June 2021.
Rather than have a cliff edge, stamp duty will also be tapered after the holiday ends. Buyers won’t have to pay property tax on the first £250,000 (double the standard level) of their house purchase until the end of September 2021. Normal rates will be reinstated on 1 October 2021.
Will it be extended further?
Obviously, things could change, but the likelihood of the stamp duty holiday being extended further is very low.
The fact that the chancellor has decided to taper the end of the holiday indicates that he is keen to get back to the standard levels. It suggests that he just wants to ensure that there isn’t panic amongst buyers to get their purchases completed before the end of June.
Also, the holiday has cost the taxpayer around £1.6 billion. It was introduced to support the housing market and buyers who had been financially impacted by the coronavirus pandemic. And it’s done just that. House prices have risen by 7% in 2020 and are forecast to rise a further 5% this year.
What does the stamp duty holiday really mean for buyers?
A buyer currently in the process of completing a property transaction can now breathe easy. The industry has been overloaded with demand for conveyancing. This has created a bottleneck in getting purchases completed.
It could also mean that you are more likely to retain your buyer if you are selling as part of a chain. We could have seen several buyers having to withdraw because they wouldn’t be able to cover the property tax.
However, if you are at the start of your house buying journey, what you will find is that the stamp duty holiday may not save you that much. House prices have risen considerably. This means that while you will save on tax, you will probably pay more for the house.
Also, it will be tight to get a purchase completed before the end of June 2021. So the likelihood is that you will still need to budget for pay stamp duty if you are planning to buy a property for anything over £250,000.
If you are currently saving, try to look for a cash savings account with the highest interest rate you can find. We have selected our favourite easy access savings accounts currently available. With this type of savings account, you can access your money at any point. This makes it a useful place to store your home-moving funds.
