Around 70,000 property purchasers could miss the stamp duty deadline as the pressure to complete before the end of next month weighs heavily on housing market.
The case for a short stamp duty extension is growing with thousands of sales agreed last year at risk of not making the 31 March deadline, according to fresh analysis by Zoopla.
Overall, there was an 11% increase in residential property sales in 2020 compared with 2019 thanks in part to the stamp duty holiday, which pushed up demand from buyers. The value of homes sold – on which stamp duty is levied – was 26% higher and up to 40% higher across southern England.
Looking at sales agreed in England over the whole of 2020, the stamp duty liability would have reached around £9.6bn and this is before the 3% additional rate was factored in, according the research. This is 52% higher than the estimated stamp duty liability from sales agreed in 2019 driven by a greater tax take from higher value homes.
The holiday was announced in July 2020 but sales in the pipeline will also have benefitted. Zoopla calculates that the stamp duty liability from sales agreed in England after the first lockdown ended in May was £7.8bn, before any extra from the 3% rate.
For sales agreed from May 2020 onwards (to the end of December), the holiday has taken 600,000 sales under £500,000 out of paying any stamp duty – saving £2.8bn or an average saving of £4,660 per sale assuming they complete by 31 March 2021.
The 140,500 sales agreed over £500,000 all saved £15,000 each – £2.1bn in total – but these sales would still be liable for £2.9bn for the stamp duty over £500,000, before any extra due from the 3% levy.
Richard Donnell, research director at Zoopla, said: “A surge in sales at higher house prices in 2020 would have created a major tax liability for UK home buyers but the stamp duty holiday looks set to deliver £5bn in full or partial savings for 740,000 buyers spread over 2020 and the first quarter of 2021. Many will have already completed their sale or will be completing shortly but for some the risk of missing the deadline remains.
“Demand for housing has started 2021 as strongly as last year with limited evidence new buyers are being put off by the proposed ending of the stamp holiday. The pandemic and lockdowns continue to stimulate households to move home and this will help soften the short term impact when the stamp duty holiday finally ends.”
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