U.K. homebuyers stand to save an additional £1.75 billion (US$2.5 billion) collectively should the country’s economy-boosting stamp duty holiday be extended until the end of June, data released Wednesday from Rightmove.
A three-month extension to the tax break is poised to be announced next week by chancellor Rishi Sunak in his March 3 budget, according to The Times of London, which on Wednesday revealed that the chancellor is set to bring the deadline in line with the wider easing of lockdown restrictions declared by prime minister Boris Johnson on Monday.
The measure, which was enacted in July and was set to expire on March 31, scrapped the stamp duty tax on a property’s sale price up to £500,000, amounting to a maximum savings of nearly £15,000.
“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,” Tom Bill, head of U.K. residential research at Knight Frank, said in a statement in response to the anticipated extension.
“There will come a point 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,” he added.
The holiday, combined with the newly reassessed housing priorities of buyers who, after spending more time at home during coronavirus lockdowns, are seeking more space and gardens, has been a catalyst for the U.K.’s housing rebound.
The real estate industry has thrived amid the coronavirus pandemic to such an extent that prices and deals have surged since the summer, causing a backlog of transactions that are still in progress.
There are roughly 628,000 sales currently going through the legal process across Great Britain, according to the data from Rightmove, which estimated that 100,000 buyers would miss the deadline should it remain at March 31.
But with a three-month extension, an additional 300,000 transactions in England alone could benefit from the tax break, equating to savings of £1.75 billion, the online real estate portal said.
An extension, however, is likely to prolong the issue of an overwhelmed system, rather than provide any real respite, according to some experts.
“You have to question the sanity of a government that deliberately chooses to intensify an already serious issue by repeating the exact cause of the issue in the first place,” Matthew Cooper, founder and managing director of Yes Homebuyers, a firm that buys property directly from home sellers, said in a statement.
“Those looking to purchase the most expensive asset in their life are arguably some of the least in need of financial support in the current climate,” he said. “When you couple this with the angst felt by many current homebuyers due to the huge market delays already caused by the stamp duty holiday, it seems fairly irresponsible to add further fuel to the flames with a deadline extension.”
Article Source: Mansion Global