The stamp duty holiday on home sales in England and Northern Ireland has been fully extended until the end of June and will taper off by the end September, Chancellor of the Exchequer Rishi Sunak announced on Wednesday in his annual budget.
“The £500,000 (US$698,650) nil rate band will not end on the 31st of March, it will end on the 30th of June,” Mr. Sunak said in his tax and finance plans for the upcoming year, referring to the tax break on home purchases up to that price point.
“Then to smooth the transition back to normal, the nil rate band will be £250,000, double its standard level, until the end of September, and we will only return to the usual level of £125,000 from October the 1st,” he said.
The stamp duty holiday, which began last July, eliminated the tax on the first £500,000 of a home sale, for a maximum savings of £15,000, in a push to stimulate the market and boost sentiment amid the coronavirus pandemic.
The measure was exceedingly successful in activating the market, so much so that the industry has struggled to handle the number of deals.
“This three-month extension will come as a huge relief for those people who have been going through the sales process since last year and were always expecting to make use of the stamp duty savings,” Tim Bannister, property expert at online real estate portal Rightmove, said in a statement.
“Our recent data show one in five sales that were agreed in the same month the stamp duty holiday was first announced in July last year still haven’t completed, so this additional time will make a big difference to help those stuck in the logjam complete their purchase in time before the new end-of-June deadline,” he added.
Within 30 minutes of the announcement, the use of Rightmove’s online mortgage calculator jumped 85% and overall traffic to the website jumped 16%, the firm said
Buyers looking to secure maximum savings by the new deadline will need to begin the purchase process by the start of May, said Nick Whitten, head of U.K. Living Research at JLL.
“The clock is now effectively ticking for new buyers who haven’t yet started the process of purchasing a home to take advantage of a reduced stamp duty charge,” Mr. Whitten said.
“According to Rightmove data, it has taken an average of 54 days to sell a home since the holiday was introduced in July, down from an average of 70 days in the 12 months prior. Assuming the average time to sell a home remains at the current level, aspiring buyers have until May 7 to begin a purchase to take advantage of the holiday extension,” he added.
Under normal circumstances, any buyer paying more than £125,000 for a property would be liable for stamp duty, with the exception of first-time buyers who would only start paying the tax on homes costing more than £300,000.
Other measures in the government’s spending plan include:
- A new mortgage guarantee scheme that will enable all U.K. homebuyers to secure a mortgage of up to £600,000 with a 5% deposit;
- £28 million to increase the U.K.’s capacity for vaccine testing, support for clinical trials and to improve the U.K.’s ability to rapidly acquire samples of new Covid-19 variants;
- an extension of the Coronavirus Job Support Scheme until September 2021 across the U.K.;
- and £22 million for a world-leading study to test the effectiveness of combinations of different Covid-19 vaccines.
Article Source: Mansion Global