Stamp duty holiday to be extended – but will it create another cliff edge?

Rishi Sunak is said to be preparing to introduce a three-month extension to the stamp duty holiday to allow more time for existing property deals to be completed.

Rishi Sunak

The chancellor is planning to announce a limited extension through to the end of June to help prevent thousands of property sales from falling through, the Times has reported.

Sunak has been under growing pressure to extend the deadline amid concerns it will create a cliff-edge and risk thousands of buyers pulling out of transactions if they miss the deadline for the tax break.

A petition demanding a stamp duty holiday extension, which has proved popular with buyers and sellers, as well as agents, conveyancing solicitors, mortgage lenders and surveyors, has now attracted more than 150,000 signatures.

The Times has been told that the chancellor will use his Budget next week to move the stamp duty holiday deadline to the end of June, bringing it into line with the easing of lockdown. The extension to the policy could cost the Treasury around £1bn.

Dominic Agace, chief executive of leading estate agents Winkworth, like many agents, has welcomed the news for the many thousands of buyers facing a cliff edge deadline.

He said: “This is great news, as it helps all those who, through no fault of their own, were set to face unexpected costs arising from a deadline set two lockdowns ago. This will ensure the property market maintains its positive influence in the economy in the tricky next few months as we start a sustained covid recovery.

Dominic Agace

“I do hope that longer term stamp duty reform isn’t forgotten. Ultimately, the property market needs longer term reform as well, to ensure it is a healthy functioning market, allowing people to achieve their aspirations and supporting the economy in the long term.”

But David Westgate, group chief executive, Andrews Property Group, believes that extending the stamp duty holiday by three months is simply kicking the can down the road.

He commented: “We will have the same cliff edge scenario in three months with buyers desperately rushing to complete sales, but facing delays due to conveyancing issues.

“Conveyancers are already struggling to work their way through the growing pile of cases accumulating on their desks.

“Extending the deadline to the end of June will simply add a whole lot more cases to the bottom of the pile, and clog up the system.

“Also, bear in mind that with lockdown restrictions due to be lifted, this will fuel the property market as we come into the traditionally busy Spring period.

“Transactions could go through the roof causing more bottlnecks in the conveyancing process.

“A much better solution would be a tapered end to the stamp duty holiday to allow conveyancers the time to work their way through cases.”

According to The Times, the chancellor is also expected to extend the furlough scheme, which is due to conclude at the end of April 30, over the same period before it tapers off as people return to work.

The business rates holiday for retail, hospitality and leisure sector will also reportedly be extended, along with the VAT cut for hospitality and tourism.

However, the article makes no reference to capital gains tax.

There is mounting speculation that the chancellor Rishi Sunak will increase capital gains tax rates in the Budget next week, as he looks to find the money required to cover the government’s unprecedented spending and borrowing during the pandemic.

CGT is generally currently charged at 10% for basic taxpayers, but there are growing calls that it should be increased across the board or possibly aligned to income tax rates – at up to 45% for higher rate taxpayers.

As far as residential property is concerned, CGT is currently charged at 18% on for basic rate taxpayers and 28% on any amount above the basic rate. Higher or additional rate taxpayers pay 28% on any gains from residential property, along with trustees or personal representatives of someone who has died.

Paul Joyce, head of mergers and acquisitions at Mazars in London, said: “We may well see an increase in CGT rates with immediate effect, potentially to align them with income tax rates.”

The government’s tax adviser recently recommended that CGT be overhauled with proposals that could see the number of people hit by the duty increase sharply.

Sunak, who commissioned the review, is considering proposals by the Office of Tax Simplification (OTS), a Treasury-based body, to reform capital gains tax in the light of the economic and fiscal impact of the Covid-19 crisis.

The move has the potential to bring in an extra £14bn by reducing exemptions and doubling rates, according to the review.

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27 Comments

  1. Rob Hailstone

    If this is accurate and there is going to be a three-month stamp duty holiday extension, with no kind of tapering or grandfathering scheme built in, it may assist many who are currently buying and selling and won’t make the 31st March deadline. However, it is likely that a whole new batch of buyers and sellers will be in the same situation in the summer, unless some hold off because of the reported property price increases over the last 12 months, hoping for a post summer drop.
    It also won’t help the already creaking (and in some cases almost on its knees) property industry; including agents; conveyancers, surveyors, lenders; local authorities and removers.
    Hopefully the Chancellor will heed the requests made by many over the last few months that a soft (petered out) landing, rather than a cliff edge landing, would be a more desirable and practical. Extension or no extension.

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    1. Mythoughts

      Talk about “Kick a Gift Horse in the mouth!

       

       

       

       

       

       

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    2. mmmm

      Those buyers agreeing deals since beginning of Jan aren’t expecting to get the saving anyway so why would this simply kick the problem down the road?
      In reality, the people everybody wants to see helped are those who agreed deals before Christmas and this will do that.
      Thank you Rishi.

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  2. AlwaysAnAgent

    There it is. The extension that some of us forecast and slightly longer than we expected. That’ll do nicely!

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    1. letstalk

      Honestly, if this turns out to be true I am beginning to think I might have a bit of luck on my side this year after a few ****** awful ones!
      I think it is right they tie it in to the end of this Covid nightmare.

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  3. flockfollower102

    A weak government demonstrating that they are easily influenced and only going for the populist view. They are creating a huge property bubble and if this is true just opening the debate to be had again in three months time. The best thing the politicians could do is just leave the property market alone, give it stability with regulations and tax schemes that are consistent, not constantly changed at a whim.

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  4. surrey1

    Would seem to be just kicking the can further down the road if so. At most it should be a month or include exchange by end of March rather than complete.

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  5. simonwilkinson73

    Great lobbying work by Propertymark!

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    1. RedRebel
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    2. RealAgent

      Seriously?!!!

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    3. Truthspeaks

      This is just moving the problem to a later date!! 

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  6. Alan Murray

    I read that one of the reasons the Chancellor is likely to extend the holiday is to give the economy a boost as we emerge again from lockdown. Which just goes to show he should have held off the original decision in the first place, to use the incentive when it was required rather than create an artificial bubble which could actually damage the economy when it ends.

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  7. RealAgent

    Honestly some people just seem to covet bad news to the extent they even try to turn something positive into a negative.

    If this is in the Chancellors statement it’s good news!… I genuinely eyes roll when I see comments like “ what he should do……”

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    1. letstalk

      Agreed. As someone who is buying a new build that was massively delayed due to all of this and was expecting to complete prior to March, but is now looking at April due to a wet winter I am extremely grateful, its news I was hoping and praying for!
      Granfathering probably woudl have made more sense, but it is clear his idea is to run this to the end of this Covid nightmare.

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  8. Truthspeaks

    I can’t do the last few months again.  It will push me over the edge!

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  9. #ImpressiveConveyancing

    With individual conveyancers topping £300k+ gross fees they need a break, not a can kicking 3 months extension to excuse the slow conveyancers who have kept their clients waiting/will not make the deadline. Do I know of any waiting clients expecting to but not able to secure 1 April – no, not on our watch.

    But tapering extension is more likely as this story is a government leak for feedback, so prepare for the fine print, not a blanket three months extension.

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  10. Ric

    If true, good news for those who are mid sale with a poor solicitor etc.

     

    The end of June is a longer extension than my guess was, but good for many buyers.

     

    Only concern now if it is end of June… (and this is not a negative, just a real possibility) if there is any rush to get on the market for sellers and we have increased listings and increased sales agreed (all sounds great but) any deals it would be wise to be asking “if the next deadline is missed, can you still move”.

     

    Could the system cope with the existing jam and another pile up behind it?  only time will tell.

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  11. Neil Robinson

    Literally nothing to complain about here. We’ve all had plenty notice of the original deadline, and we’ve now got plenty notice of the new one.

    It’s up to us to fit in.

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  12. andrew1503

    Lots of speculation here but no facts. Let’s wait and see what the man actually says.

    A lot of the slowness is furlough and people working remotely. Systems not properly set up at home etc.

    But with the conveyancing process this slow, I doubt if many people will be able to move within the extension period anyway. It will though, help those already proceeding.

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  13. smile please

    Well this is welcomed news.

    Be getting the team called through the last few weeks vals looking to entice them to the market.

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  14. Property Searches Direct

    Now is the time for agents to look at their processes to avoid just another glut of transactions being disgruntled. There is so much more that can be done to speed up transactions. When a client takes the phrase Get Legally Prepared seriously and their agent understands what it means, the transaction is set up to exchange far quicker.

    If the industry does not change, nothing will improve.

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  15. Murray Lee

    There is a simple solution

    Just allow buyers who have agreed a sale BEFORE 31/3 to continue to take the advantage of the “holiday”

    We set up a mechanism whereby our sales memo along with confirmation of instructions by the vendors lawyers is taken as “proof” of agreement of  sale

     

    Iy can be backed up with a contract being issued if possible and/or connection between the lawyers to “set the date”

     

    Anything agreed after 31/3 would not qualify

     

    I have heard people suggest this cannot be policed and open to abuse

    I cantt see why anyone would try and abuse it. You are hardly going to pretend you are buying house to get the holiday …. are you?

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  16. GudeHG

    A tapering off would certainly seem more sensible, however this is good news for many nonetheless.

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  17. Mintimus

    I don’t think anyone with half a brain wants a blanket extension. It should only be extended if can be shown that certain legal stages have been reached ie sellers pack sent out enquiries raised otherwise just another delaying of the inevitable chaos and distorted market

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  19. Andrew Stanton Proptech Real Estate Strategist

    First off no extension has been sanctioned by the government. Second any extension replicates the problem. 1.2M completions every 12-months, so pick any date and tens of thousands lose out in the following month, and within a year hundreds of thousands who are in the parameters of the present SDLT holiday miss out too. Third – as it is 2021, on the separate problem of why there is a bottleneck – any chance that all the stakeholders stop using paper and biros and use a keyboard, software, and agree industry norms, truths and protocols? – just asking.

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    1. Murray Lee

      Not if they follow my suggestion. ONLY sales AGREED by 31/3 benefit. Then it dont matter when the completion is

      #schimples

       

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