The stamp duty holiday is great news for buyers but, warns Peter Joseph of Home Legal Direct, there are a few pitfalls to watch out for before proceeding…
The launch of the stamp duty land tax holiday in July last year proved a huge success.
It gave the extra impetus to homebuyers who, in the wake of the first national lockdown, realised their home no longer suited their needs.
This, combined with the prospect of saving thousands in land tax charges, fuelled buyer demand throughout the country.
However, as buyers flocked back to the market, the industry quickly began to feel the pressure. A bottleneck of cases soon built up, making it harder for purchases to complete due to delays in the process.
This was a particular problem for local authorities, which have been inundated with search requests.
It was no surprise, as we approached the original deadline of the stamp duty holiday, thousands of buyers called for an extension.
The chancellor, Rishi Sunak, confirmed an extension of the stamp duty holiday during his speech announcing the Spring Budget. Speaking to Members of Parliament, he announced the £500,000 nil-rate band would continue until 30 June 2021.
He went on to confirm a subsequent tapering of the new deadline, where the nil-rate band will drop to £250,000. It will return to the usual level of £125,000 from 1 October 2021. The news has been welcomed by the many homebuyers who now have a better chance to save on their purchases.
Who will gain the most?
Now that the extension of the tax break has been confirmed, thousands of homebuyers stand to benefit.
The trepidation of the original 31 March deadline has been replaced with both excitement and relief.
With more time for transactions to complete, demand from buyers remains higher than usual levels.
Reports show purchasers in London and the South East are set to benefit most from the extension, with demand expected to increase soon in these areas.
Although new cases are less likely to see the full benefit, the tapering of the deadline will still afford savings to many.
Delays remain
As mentioned, one of the biggest delays encountered by prospective homebuyers has been with local authority searches.
The surge in demand following the launch of the stamp duty holiday has led to local authorities being inundated with requests. As a result, some councils have reported expected turnaround times several weeks longer than before the pandemic.
With the extension and tapering confirmed, the market has taken a temporary breath, but there are no current signs as to how searches have been affected.
The best advice for homebuyers who require a local authority search is to order it quickly. Indemnity insurance policies, where possible, can also help transactions move forward in the absence of search results.
News of the stamp duty holiday extension and subsequent tapering has been well-received by both property purchasers and professionals alike.
Increase in demand
Previous concerns of a ‘cliff-edge’ in the market have been soothed with the tapering of the deadline from July to the end of September, offering reassurance.
The thousands of cases currently underway which risked falling through if they missed the original deadline are now much safer and more likely to complete in time.
Although the market has calmed in the wake of the announcement, buyer demand is expected to increase again over the coming weeks.
As savings are not guaranteed, buyers should act quickly to get their case moving and have the best chance of completing in time.
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Peter Joseph is CEO of Home Legal Direct
