Stamp Duty Land Tax: will there be a holiday extension?
Maria Richards, Partner and Head of the Residential Property team at Coodes Solicitors, discusses the possibility of a Stamp Duty Holiday extension following a debate in Parliament.
In order to boost the residential property market during the ongoing COVID-19 pandemic, a Stamp Duty Land Tax (SDLT) holiday was introduced in July 2020. This meant that people purchasing properties received significant reductions in the costs of buying a house. Buyers currently don’t have to pay SDLT on properties under £500,000 and only pay a reduced rate for properties over that amount. This holiday is due to end on 31 March 2021.
Earlier this week, MPs debated the possibility of extending the SDLT holiday following an online petition. This now has more than 141,000 signatures and calls for a six-month extension, to help people continue to afford to move and to stabilise the property market.
During the debate, MPs considered many different options for what could happen to SDLT after the current holiday deadline.
What changes could we expect to the SDLT holiday?
It remains to be seen what action the Government will take as a result of the debate. What is clear, however, is that there was agreement among all parties that the current ‘cliff-edge’ approach could have a significant impact for all those involved in the industry.
Some of the alternative possibilities considered were:
- Move the current deadline (31 March) to a new date.
- Provide relief for those already in the advanced stages of purchasing a home (it tends to take an average of 12 weeks to purchase a property).
- Taper off or wind down relief over a period of months.
- Make permanent the current no-SDLT payment threshold of £500,000.
- No change to the current deadline.
All of the changes proposed have different benefits to them. However, if the Government chooses to simply move the deadline to a new date, they will only be postponing this issue.
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What does this mean for the property market?
It is unclear at this stage what changes if any, will be made to the SDLT holiday, and what this could mean for the property market. If the current deadline remains in place with no changes, SDLT will return to the rates that were in place before the holiday. This may have a huge impact on buyers, and in turn on those associated with the industry, including conveyancers, agents, lenders and removal companies.
We, at Coodes Solicitors, however, are optimistic that, even if the deadline of 31 March remains in place and there are no further changes to the SDLT holiday, the property market will remain strong.
After the first lockdown in 2020 was lifted, the property market was buoyant, and there was some debate as to whether the SDLT holiday was actually required in the first place.
There are many factors that influence people’s decisions to move home. Lockdown, and the ongoing pandemic, has been a huge factor in these decisions over the past year. Research has shown that, with an increased focus on agile and home working, buyers are more eager to purchase homes in rural and coastal locations, with more indoor and outdoor space.
Whatever happens, Coodes can help guide you through the changes and support you in your residential property purchase.