Since launching in July 2020, the stamp duty land tax holiday has proven to be a huge success. In addition to the release of pent-up demand triggered by the first national lockdown, it encouraged buyers back to the market. During uncertain times, the savings for buyers to benefit from inspired an increase in demand. Although buyers were excited at the prospect of savings, the pressure was soon felt across the industry. The sudden increase in cases, at a time where many companies were operating with less staff and unfamiliar working conditions, caused a logjam to build. This made it harder for cases to reach completion, with delays being encountered along the way. One of the hardest-hit areas is local authority searches, with delays of weeks longer than usual turnaround times. Due to the delays in the process, homebuyers eagerly anticipated an extension of the stamp duty holiday, beyond the original 31st March deadline.
The stamp duty holiday has been extended!
At the Spring Budget meeting, the Chancellor confirmed the extension of the stamp duty holiday. The three-month extension will see the £500,000 nil-rate band continue until 30th June 2021. After this date, Rishi Sunak confirmed a subsequent tapering of the new deadline. The nil-rate band will drop to £250,000 until the end of September. The nil-rate band will return to the normal level of £125,000 from 1st October 2021. News of the extension and tapering of the stamp duty holiday has been celebrated throughout the market, as more movers stand to benefit.
What does the stamp duty holiday extension mean for your purchase?
As a result of the extension, thousands of homebuyers can now benefit from the savings afforded by land tax holiday. The market has calmed following the announcement, but demand is expected to rise in the coming weeks as the countdown to the new deadline commences. Areas such as London and the South East are expected to see a particular rise in transactions, following reports that buyers stand most to benefit in these areas. In general, cases currently underway have the best chance of benefitting before the new deadline. However, for new cases where the June deadline may be unrealistic, the tapering can help provide some savings to buyers and make their purchases possible.
Will local authorities experience more delays with searches?
Delays with local authority searches have been one of the biggest hurdles for homebuyers during the stamp duty holiday. The surge in demand has been great for the economy at an unprecedented time, but local authorities have come under pressure. As restrictions were implemented in response to the pandemic, turnaround times have increased. However, there are no clear signs at present as to how local searches will be affected by the extension.
What will the impact of the stamp duty holiday extension be for the market?
News of the extension of the stamp duty holiday has been celebrated throughout the country. Any previous concerns for a “cliff-edge” in the market have been eased by the subsequent tapering of the new end date. The thousands of homebuyers with cases currently underway can breathe a sigh of relief that they have more time to get their completions through. While new cases are being advised they are less likely to complete before the new deadline, the tapering will bring still bring some savings to many.
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