Extension of stamp duty holiday

[user1471542288]

to be debated by MPs next Monday Feb 1st

Does anyone know the outcome of the debate? Will the stamp duty holiday be extended?

No changes made today. They will reassess at the next budget on March 3rd.

That's not very helpful really, is it?
We are in the process of moving and made it clear to all parties involved that the move would only happen if completion went ahead on or before the 31st March. Our offer on a property was accepted mid October and we accepted an offer on our house the week prior, so everyone has had plenty of notice. Our vendors said they would move in with family/rent if they didn't find something in time. Our part of the chain is ready to exchange, but it doesn't seem like this for others in the chain as our vendors found a house they like and have only conducted searches in the last week. Doesn't look like we are going to be moving, does it?

Most MP’s from what I saw were supporting SDLT extension in some form, whether taper relief or for movers already well down the line in the process. Over to you Rishi.

We are at the offers have been accepted stage. It would be great if we could be included in a potential "tapering"

Sunak agreed on leaving the triple tax lock (income tax, NI, VAT) unchanged to not deviate from their manifesto. This represents 60% of all tax collection, leaving him with little room and only taxes at the margin. Options are corporates tax, capital gains and...property. So I would expect increase rather than decrease in the March budget.

Many economists are unsure about the value of SDLT holidays. In this instance it may have helped as it kept the property market moving, so kept people in jobs.

But eventually it is felt that all it really does is shift transactions forward that would have happened anyway. This time it has also benefitted those in secure jobs who are able to get mortgages, but left those whose employment was affected by Covid, out in the cold. A unusually high proportion of transactions involved investment buyers.

There will be on-going activity in the property market beyond the death and divorce forced sales. Many people are having to wait until the end of the recession to see what is happening to their jobs. Will they exist? And can they continue working from home. If WFH remains a thing, you can expect more movement from cities to smaller towns and villages as people seek more space.

There may well be a fall in the price of FTB property, perhaps more than the stamp duty concession, which will help FTBs and those moving up the ladder.

If I were advising Rishi, and I am not, and the news on Covid continues to improve, I would suggest there will be more efficient ways to spend Government money.

Hope there isn't gonna be an extension, I wish the gov't would stop protecting the housing market and let it crash. Gives us FTB's the upper hand for once...

@CoronaIsWatching good luck getting a mortgage or having much choice in stock in a housing crash, housing crashes benefit very few people. Do you not remember what it was like for FTBs a decade ago?

@user86386427 I was a first time buyer in 2010 and everyone was saying it was a great time to buy, with low house prices. We were only able to borrow 3.5 x our salary though, which didn’t leave us with many options in terms of affordability.

which didn’t leave us with many options in terms of affordability.

Precisely. People say crashes are good for FTBs but that's only the case if you have a good deposit and are squeaky clean, a lot of people weren't able to buy at that time due to the changes in borrowing, so it can't be said it's a good thing for FTBs as a whole.

Inversely, house price inflation can be said to be a bad thing for FTBs as a whole.

I think there are 2 issues here:

1. Whether stamp duty is a good tax overall - Almost everyone agrees that it only adds to friction in the market and more boost to the economy could be achieved without it by stimulating housing and other ancillary services. However, given the fiscal hole the government is in now I do not think if that will be deemed a viable choice at this point.

1. Extension of the current deadline:

a. I think the SD holiday has served its intended purpose of stimulating the market (as reflected by almost 7% yearly increase in house prices, which is far more than the actual stamp duty saving of almost 15k). Looking back, one could question why would buyers prefer to pay almost 7% more to save 2-3%. The 7% is pocketed by asset rich homeowners who do not need immediate help in the battered economy. Plus Rishi Sunak will create one more cliff edge (six months down the line) if holiday were to be extended for all for few months.

b. I do not think it is anyone argument that with stamp duty prices will crash. With historical low interest rates, net immigration and severely restricted housing supply, hosing market will continue to climb up in mid to long term barring few corrections in the interim (say 5-6%) in a year but over time it will recover given the structural issues in the market as mentioned above.

c. In all likelihood, the prices will witness a slow decline / burn over the next 1 year followed by stagnation or so until economy fully recovers.

d. Personally speaking, I would be in favor of extending deadline for those buyers who are currently in the pipe to exchange before the deadline. Hopefully the market will come back to its senses after Mar-April (definitely not a crash) by a mild correction, which will most likely help buyers more. I would rather pay 2-3% stamp duty on a lesser priced house.

That said, this govt is notorious ofor making last minute announcements so we never know.

Looks like a short 6-week extension is being considered at the moment: www.standard.co.uk/news/politics/rishi-sunak-stamp-duty-holiday-b919675.html

Unclear if this would be limited to those already in the pipeline (realistically you're not going to get a new sale completed in that time in any case). But would be good and sensible to account for people already in a sale chain for months and delayed due to Covid backlogs on e.g. searches, probate applications etc.