Will the stamp duty holiday be extended?

BRITS have been taking advantage of the stamp duty “holiday” as part of plans by Rishi Sunak to boost the property market.

Tax on the purchase of homes of up to £500,000 has been removed thanks to the initiative.

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The stamp duty holiday was unveiled as part of the Chancellor Rishi Sunak’s “mini-Budget” in July 2020.

The move came at a time when property prices fell for the first time in eight years due to the pandemic.

But how does the stamp duty holiday work and will it be extended?

We explain everything we know so far.

When does the stamp duty holiday end?

The stamp duty holiday is due to expire on March 31, 2021.

At the moment, it is unclear whether it will be extended beyond this deadline.

There has been growing calls to extend the tax break amid the continued economic uncertainty caused by Covid.

But hopes of an extension started to fade last month, as The Sun revealed that Rishi Sunak is said to have privately ruled out extending the scheme.

However, property buyers have since been given a boost as The Sunday Times reported after that a stamp duty holiday extension is still on the table.

Buyers racing against time to complete before the deadline could be handed a lifeline, according to the Mirror.

The government will ensure those with a deal already in the pipeline can still take advantage of the tax break, the newspaper says.

Mr Sunak could extend the Stamp Duty holiday by six weeks, according to a fresh newspaper report, which would give them until mid-May.

A third of house sales could fall through if it is not extended, an industry expert warned in December.

In a survey by the Guild of Property Professionals, thousands of homebuyers said they will pull the plug on their deals if it is not extended.

Around a third (31%) said they would very likely cancel their planned move if they had to pay stamp duty, with a further 43% admitting that they would most likely do the same.

Last month a new group of backbench Tory MPs launched a campaign in favour of making the relief permanent to stimulate economic growth. 

Will the stamp duty holiday be extended?

We don’t know for certain whether a stamp duty holiday extension is off the cards.

But Mr Sunak is said to be determined to resist calls for an extension as he looks to ways of paying for the huge Covid bill, which was at nearly £300billion in January.

Although the nine-month stamp duty holiday may have sparked a boom in the housing market, it has cost taxpayers an estimated £3.3billion.

And buyers looking to take advantage of the scheme before the deadline may well have missed their opportunity to get their sale completed in time.

Another industry expert warned in early November that half of house sales agreed from then will miss the stamp duty discount deadline.

This is because lockdown measures and pent up demand for houses has caused the time it takes to buy a property to double, according to data from online mortgage broker Trussle.

Any changes to the stamp duty holiday are likely to come in the Chancellor’s Budget on March 3.

How will the stamp duty holiday help the economy?

The Treasury announced the stamp duty holiday in a bid to breathe life into the property market after it effectively froze during the first lockdown with viewings, sales and moves suspended.

Experts said that a stamp duty holiday would encourage more home owners to move, helping to kickstart economic activity in other sectors.

Speaking at the time the tax relief was revealed, Paul Johnson, director of the Institute for Fiscal Studies, told The Times there was a “good chance” that the policy would benefit the economy in the short term.

He said: “The housing market is very thin… Anything which gets it moving would potentially help.”

How much money could you save?

The average house cost £248,000 in England in March 2020, according to the Office for National Statistics (ONS).

If you purchased the average house as a first-time buyer, you wouldn’t have to pay any stamp duty thanks to the relief on homes below £300,000.

But if a first-time buyer bought a property for £500,000, they’d save £10,000 in stamp duty, Peter Gettins of mortgage broker L&C Mortgages, told the Sun.

Home movers who bought the average property for £248,000 would save £2,460 on stamp duty, while Brits buying a second home for the average price tag would save a whopping £9,900.

You can calculate how much stamp duty you currently have to pay on the Money Advice Service website.

The government also has a handy calculator that tells you how much you would pay on a property.

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Here’s how you can get on the property ladder with just a 5% deposit by using the new Help to Buy equity loan.

And first-time buyers could find it easier to buy a home, with NatWest and Lloyds bringing back 10% deposit mortgages.

Check out our guide to buying your first home, including how much you can borrow and the help available.

This post first appeared on thesun.co.uk