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Glimmer of hope over stamp duty holiday extension (for some)

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A campaign led by the property sector to extend the Stamp Duty Tax holiday saw a glimmer of hope last week when Jesse Norman, the Financial Secretary to the Treasury said the government and HM Treasury would consider ‘substantial performance’ as well as ‘completion’ status of those in the process of buying a home.

What could this mean?

“Some observers have taken that ‘substantial performance’ element to be the possibility – just the possibility- of a tapered end to the holiday, where buyers who had reached a certain stage of their transaction would still get the SDLT discount, even if completion had to be after March 31,” reported EstateAgent Today.

The current SDLT threshold for residential properties is £500,000, after the 1st of April, unless a swift change is proposed by The Treasury, it will go back down to £125,000. The threshold for non-residential land and properties is £150,000 and will continue to be.

What has happened on the stamp duty holiday?

The temporary stimulus was put in place to nudge the property along after the initial lockdown last year and to keep jobs. Prices and transactions soon became frothy when buyers took advantage of savings as much as £15,000.

Not all house buyers have reaped the advantages, though. One set of victims of the stimulus are first-time buyers as an active housing market rocketed houses prices. Residential prices leapt as much as 31.5% from December 2019 to December 2020, according to HM Revenue & Customs figures. UK average house prices increased by 7.6 per cent in the year to November 2020, numbers not seen since June 2016.

The average house price is now £250,000 while in London prices passed £500,000 for the first time.

From 1 April 2021, first-time buyers will get a relief or discount, meaning you will pay less or in some cases no tax if both the following apply:

  • you, and anyone else you’re buying with, are first-time buyers
  • the purchase price is £500,000 or less

You will be eligible for this discount if you bought your first home before 8 July 2020.

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