As Parliament is to debate extension of Stamp Duty holiday, a tax expert discusses dangers of holiday cut-off
As Parliament is to debate extension of Stamp Duty holiday, David Hannah of Cornerstone Tax discusses dangers of holiday cut-off.
Following weeks of mounting pressure on the government to extend the Stamp Duty holiday in the UK beyond the current March 31st deadline, the House of Commons has announced that an extension will be debated in parliament.
The stamp duty holiday means homebuyers across England and Northern Ireland pay no stamp duty when purchasing homes up to a value of £500,000, with a reduced rate for homes above that. For someone buying a £500,000 property, the saving is worth £15,000.
The end of the holiday on 31 March 2021 has led to a backlog in transactions as the logistics of the housing market have not been able to keep up with demand, whilst many others have seen agreed upon deals fall through as homebuyers and sellers have pulled out amidst concerns that the transaction will not be completed prior to March 31st.
Furthermore, forecasters have predicted a rapid downturn in the housing market in 2021, with the stamp duty holiday set to expire and unemployment likely to rise when the furlough scheme ends in April. This has overwhelmed conveyancing, surveying, mortgage and search services, with Rightmove’s data shows a logjam of 650,000 properties changing hands, many of which will not complete before the end of the stamp duty holiday.
David Hannah, Founder and Principal Consultant of Cornerstone Tax, discusses what can be done to prevent the cliff-edge of those who believe they will benefit from missing out, and to soften the drop in demand:
“It is excellent to hear that parliament is finally going to debate a possible extension of the Stamp Duty holiday. The approaching end of the stamp duty holiday is already having a profound effect on the property market, sale collapses are approaching record highs and solicitors and conveyancers are already reporting that they expect to see a considerable drop in demand very soon. Many are expecting to be without anything to do by mid-February.
“Calls to make the holiday permanent or scrap the tax altogether seem unrealistic given the levels of public debt and the £12 billion tax take it generates each year, but having such a strict cut-off point, particularly in such a turbulent and difficult housing market and economic climate could result in a catastrophic drop in demand and prices.
“Home ownership is key to the UK economy, upward mobility and the aspirations of many that are currently struggling to get on the property ladder. Not only this but making it easier to move house without being penalised for doing so will make it easier to move to areas of growth and where jobs are. Especially important as we see a de-urbanisation and migration away from cities in the wake of the pandemic.”
Kindly shared by Cornerstone Tax
Main article photograph courtesy of Pixabay
