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Chancellor urged to extend the stamp duty holiday

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Written by: Samantha Partington
28/10/2020
The government is urged to extend the stamp duty holiday by six months as the market struggles to keep up with the surge in demand which could mean homebuyers miss out on up to £15,000 of savings.

In a letter to chancellor Rishi Sunak, trade bodies and property firms have called for a smoother end to the stamp duty holiday to prevent a cliff edge halt to the incentive.

They want an extension of up to six months to be announced before Christmas.

In July, Sunak announced that the first £500,000 of the purchase of a main residence would be stamp duty free until 31 March. The exemption means buyers can save up to £15,000 in tax.

The group has warned the government that the home buying and selling industry does not have sufficient capacity to deal with the surge in demand caused by the rush to complete transactions by the deadline.

The group wrote: “Movers will apply pressure to complete transactions by 31 March in order to benefit from the changes to Stamp Duty Land Tax and to meet the Help to Buy requirements.

“Failure to complete those transactions could see the breakdown of chains with consumers potentially financially unable to continue with the purchase, as they would have to find funds to pay stamp duty.”

Disruption caused by Covid-19 has driven up average property transaction times from 12 to 20 weeks putting home movers at risk from missing the stamp duty deadline, the group said.

It added: “By acting now, the government can release the pressure in the system to allow transactions to complete and avoid a disorderly and distressing period for movers and businesses throughout the market.

“Any extension or gradual phasing of the SDLT would also help mitigate sharp reductions in consumer demand. More widely, a buoyant housing market drives consumer confidence in the wider economy whereas constrictions on lending and falling house prices lead to reduced consumer confidence and a material reduction in economic activity.”

The group said it was ready to work with the government to avert these risks.

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