By Harry Brown, Property
With a little over five months to go until the Stamp Duty holiday deadline, the conversation about extending the tax break is gathering momentum. And with many leading property developers and housing organisations calling for a rethink on the deadline, it’s clear that the government has a big decision to make.
For the 43% of us who aren’t homeowners, Stamp Duty may be a relatively unfamiliar term. However, it has been part of the British tax system since the 17th century, when it was first introduced during the reign of William III and is essentially a tax levied on property purchases. It operates on a threshold basis depending on the price of the property.
Earlier this year, anticipating a slowing of the property market, Chancellor Rishi Sunak announced that, temporarily, the lowest threshold for Stamp Duty in England – the point in which a buyer would pay any of the tax at all – would rise to £500,000, offering some buyers savings of up to £15,000.
The break, or “holiday”, has been well received by both buyers and sellers – August was the market’s busiest month for more than a decade, with the highest number of homes put up for sale since 2008, according to Britain’s largest property website, Rightmove. Yet there are major question marks over the ending of the holiday, and what its consequences could be.
Many want the holiday to be extended because of this unprecedented spike in demand, up 21% from April, which is creating a backlog of buyers. Combined with Covid restrictions, it is currently taking as long as 15 weeks to see a deal go through. Legal & General has pointed out that this means buyers looking to cash in on the Stamp Duty Holiday will need to do so by the 2nd of November 2020, rather than 31st March 2021.
The housebuilding industry also argues that once the realities of lockdown, end of furlough, and the upcoming changes of Help to Buy all materialise, the government could be ending the holiday when it is most needed.
This all creates questions over the immediate future of the Stamp Duty holiday. This government is keen to see housing reform and has certainly shown itself not to be shy of a U-turn. Given Boris Johnson’s ambitions to create “Generation Buy”, the sensible money suggests we might be playing with our buckets and spades for a little bit longer.