BUDGET 2021: Chancellor confirms extension of stamp duty holiday to June

The Chancellor has confirmed the stamp duty holiday will remain in place until the end of June.

At his Budget speech in the House of Commons, Rishi Sunak announced the £500,000 nil rate band will end on 30 June, rather than the planned deadline of 31 March.

In July last year, the government raised the stamp duty threshold from £125,000 to £500,000 in a move which exempted most home buyers from paying the levy if they could complete their purchase before 31 March.

However, Sunak told the House that due to the “sheer volume of transactions” still to be completed before the end of March, the holiday is to remain in place for three months before being “tapered down” by the end of September.

After 30 June, Sunak revealed the nil rate band will drop to £250,000 and stay in place until 30 September – a level still double the initial threshold before the holiday. From 1 October, the stamp duty threshold will revert to £125,000.

Legal & General Insurance head of intermediary, Sarah Watts, commented: “We welcome the news of a stamp duty extension as this period of time will help many of those already in the buying process.

“However, as an industry we must look beyond this, including ways advisors can future proof their business through a strong general insurance book if there is more volatility in the mortgage market.”

LMS CEO, Nick Chadbourne, said: “While today’s extension is great news for borrowers in the pipeline, as is clarity on the tapering off timeline, the initial cliff-edge has simply been moved to the 30 June.

“The extension adds fuel to an already well-lit fire, and will likely cause a second surge of purchase applications in the coming months. However, its necessity is debatable. Most borrowers are motivated by far more than just a tax break, and high cancellation rates if the stamp duty holiday ended in March were highly unlikely.

“COVID-19 has forced homeowners to re-evaluate their priorities in terms of space, location and accessibility, and these factors will continue to buoy the purchase market long after the scheme comes to an end.”

Stonebridge Group CEO, Rob Clifford, suggested the extension creates a risk that might act as the “catalyst for a further spike in new purchases” that now attempt to complete before the new deadline, which he said “the market needs to consider”. 
“Let’s not forget that a short-lived stamp duty holiday isn’t the solution,” Clifford commented.

“The government missed a trick today when they could have brought about a permanent resolution – by accepting the compelling economic arguments that suggests it’s an outdated tax and its removal would consequently lift transactions and thereby deliver far more taxation upside to the Treasury’s coffers than the stamp duty system does today.

“This would also have taken some of the pressure off solicitors, advisers, lenders and clients, which the holiday approach perpetuates. Whilst we naturally welcome a busy market, we still appear in danger of having thousands of transactions not completing before this new deadline, which will hurt consumers, and exacerbates the risk of aborted sales, at great cost to both consumers and the wider economy.”

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