"Due to the sheer volume of transactions we’re seeing, many new purchases won’t complete in time by the end of March."
Sunak said that "to smooth transition back to normal", the nil rate band will reduce from £500,000 to £250,000 from the end of June until the end of September, before reverting back to £125,000 from October 1st.
Speaking in today’s Budget Sunak said: “Due to the sheer volume of transactions we’re seeing, many new purchases won’t complete in time by the end of March.”
Rightmove recently estimated that 100,000 people could face an unexpected stamp duty bill amid delays in the home buying and selling process due to social distancing measures, illness and home-schooling.
Extending the policy is estimated to cost the Treasury around £1bn.
Last month, MPs showed cross-party support for a taper or extension to the stamp duty holiday during a virtual House of Commons debate.
Nick Chadbourne, CEO of LMS comments:
“While today’s extension is great news for borrowers in the pipeline, as is clarity on the tapering off timeline, the initial cliff edge has simply been moved to the 30th June.
“The extension adds fuel to an already well-lit fire, and will likely cause a second surge of purchase applications in the coming months. However, its necessity is debateable. Most borrowers are motivated by far more than just a tax break, and high cancellation rates if the SDLT holiday ended in March were highly unlikely.
“COVID-19 has forced homeowners to re-evaluate their priorities in terms of space, location and accessibility, and these factors will continue to buoy the purchase market long after the scheme comes to an end.”
Paresh Raja, CEO of Market Financial Solutions, commented: “Extending the stamp duty holiday is exactly what the property market needs. The appetite among buyers remains strong, and it makes sense for the Government to build on this momentum through targeted tax reliefs. The market response will be immediate – I anticipate agencies and lenders will receive another surge of enquiries in the coming 24 hours, and this should lead to a rise in property listings.
“My advice is for buyers and sellers to act sooner rather than later. Three months may seem like a substantial amount of time, but with mortgage providers taking longer to process applications, loan delays could increase the risk of transactions not being completed in time. In the two months following the initial announcement of the stamp duty holiday on 8 July, a survey by MFS revealed that 32% of prospective buyers had been denied a mortgage.
“That is why buyers need to ensure they engage with lenders who can deploy finance quickly, be it a mainstream or alternative finance provider. Failing this, there is a risk of buyers missing out on this new holiday deadline due to factor outside of their control.”
