Many Britain’s have been able to purchase homes for less, due to the UK Government’s stamp duty holiday. This discount is set to end on 31 March 2021, but Chancellor Rishi Sunak is being pressured to extend it. So will the discount continue? And if it doesn’t should you still continue with your planned house purchase?
What is the stamp duty holiday?
The UK Government introduced the stamp duty holiday. They did this in a bid to ensure that the housing market didn’t stall during the global pandemic. It meant that buyers could potentially save up to £15,000 in tax, provided they move home before 31 March 2021. It was hoped that the measure would encourage some people to buy, as they strive to make the extra saving.
The Treasury seemed happy with the impact this break was having, reporting a 21.3% boost in house sales in September 2020. However there aren’t current plans to extend the stamp duty scheme. A spokesperson from The Treasury said: “The SDLT holiday was designed to be a temporary relief to stimulate market activity and support jobs that rely on the property market. The government does not plan to extend this temporary relief.
“The COVID-19 pandemic and subsequent lockdown caused uncertainty for those buying and selling residential property and property transactions fell by as much as 50% during the first national lockdown.
“To stimulate immediate momentum in the property market and to support the jobs of people whose employment relied on custom from the property industry, the government decided to introduce a temporary Stamp Duty Land Tax (SDLT) relief. This relief increased the starting threshold of residential SDLT from £125,000 to £500,000 from the 8 July 2020 until 31 March 2021.”
If you may miss holiday, should you proceed?
Ideally, the stamp duty break would be a welcome bonus for buyers. If you can’t afford to move without it, then maybe you should consider your options.
But if you have a deposit and you have job security then 2021 could still be the year to make a house purchase.
To work out how much it would cost and if you can truly afford it, type your figures into this mortgage calculator. I like this one, as it explains what your fixed-rate loan payments would be, along with interest-only payment totals.
Could there still be an extension?
Over 50,000 have signed a petition, asking for the stamp duty holiday to continue and if this petition reaches 10,000, then the issue will be debated in parliament. According to the Financial Times, many industry professionals are also calling for an extension to this tax break. So it is possible that the government will do a u-turn on this.
Like many things, it’s a waiting game, to see if the UK Government decides to grant the extension. We can’t predict when we will know for sure. So in the meantime, go and view houses and work out exactly what you can and can’t afford. As this is something you can control.