Stamp Duty Extension Likely

It’s being reported that Chancellor Sunak is about to extend the stamp duty holiday until the end of June, following months of pressure from the property industry. The forthcoming Budget on March 3rd is likely to confirm an extension of three months, “bringing it into line with the easing of lockdown restrictions”.

The tax break, which applies to sales up to £500k, is officially due to come to an end on 31st March; much noise has made about the dangers of a “cliff-edge” piling pressure on the conveyancing system, and resulting in thousands of deals falling out of bed.

Consumer data firm TwentyCi calculates that 193,198 sales would benefit from the extension, the estimated cost of which is put at £1bn.

Rightmove estimates higher – an additional 300,000 benefitting, saving buyers a combined £1.75 billion. The portal suggests that around 628,000 sales are currently in the legal process across the UK, including those that were agreed last year and those that have been agreed so far this year. It predicts that 100,000 buyers who agreed a purchase last year stand to lose out unless the deadline is extended.

An extension is inherently fair because it addresses the fact parts of the conveyancing system have become overwhelmed, which has jeopardised completion dates. It would also match what the Chancellor is doing to prolong support measures in other areas of the economy. But there will come a point however, when the holiday overstays its welcome. A greater degree of seasonality needs to return to the housing market as lockdown restrictions are lifted in coming months. More normality means buyers and sellers pay attention to the calendar year not the tax year. Supply and demand also need to stabilise, which could be made harder by an ever-shifting tax landscape.