Rumours are surfacing in Whitehall regarding a potential stamp duty extension. But will it be significant enough to save buyers being caught up in a completion trap?
It’s reported that Chancellor Rishi Sunak is considering a six-week extension beyond the 31st March deadline to prevent buyers being forced to pull out of transactions due to unexpected costs.
The fine details are not apparent, however a blanket extension is quite unlikely, and we envision that only an extension for those buyers who already have a sale agreed or have exchanged contracts before the budget announcement on March 3rd will be gifted the relief.
Not only will this provide much needed relief for stretched conveyancing solicitors, but also reduce the amount of buyers pulling out of agreed transactions due to needing to find an extra £15,000 when they discover that the deal won’t be delivered in time.
Furthermore, a blanket extension for the short term that includes all types of buyers, could actually have damaging side effects. Potential purchasers who have stopped their search for a new home due to the cut off date, and who will no longer benefit from the tax break, will rush to the market again if the holiday is extended. This would force processing delays to be even worse, and the market may face an even bigger decline come May.
Of course it could be argued that the holiday needs to be longer, but it’s equally as important to close the relief with no harsh repercussions to buyers, and this stamp duty move will soften the cut-off. Reallymoving, a comparison website, has forecast a sharp year-on-year price drop of 4.2pc in April.
It’s apparent that the market will soon need to come to terms with the economic results of the pandemic.
If you would like to know more about Stamp Duty and how it might affect you, we’d be happy to discuss any queries with you. You can call Love Your Postcode on 0800 862 0870.