Now that we’ve reached December the current Stamp Duty Land Tax (SDLT) holiday deadline is closing in thick and fast. However, there are many conveyancing firms and estate agents concerned the housing market will take a sharp downturn when it ends as well as buyers walking away from transactions already in the pipeline.
Yet, the industry has already experienced similar outcomes when the government last held an SDLT holiday in 2008 as well as the additional rates on second home property purchases in 2016. Therefore, will the 2021 holiday have the same ending as back in 2008/2016?
It’s no secret that conveyancers are currently under the cosh processing the highest volume of transactions the industry has experienced in ten years. With such a short window of opportunity for buyers to take advantage of this huge saving, the Conveyancing Association (CA) has eagerly been lobbying the government to implement a set of measures to avoid transactions diving off a cliff.
Despite industry calls for the government to review how it ends the Stamp Duty holiday it doesn’t look like any of the suggestions to avoid a “cliff-edge” end to the holiday have been considered. Therefore, many conveyancers have now started to update their systems to charge new clients SDLT as it’s unlikely that they will be able to benefit from the scheme now.
Before the current SDLT holiday for residential house purchases the current rates in England & Northern Ireland are as follows:
|Consideration||Rate (paid on the portion in band)||Additional Property Rate|
|from £40,000 to £500,000||0%||3%|
|from £500,001 to £925,000||5%||8%|
|from £925,001 to £1,500,000||10%||13%|
Looking back, Stamp Duty Land Tax was first introduced to England and Northern Ireland in 2003 and over the years it has seen several reforms. More recently when a new set of rates were introduced, ‘the higher rates’ for additional dwellings, which applies to buyers who already own residential property elsewhere in the world.
The housing market is hugely beneficial to the UK’s economy and while the UK rebounded from its recession from July – September it has been reported that the economy is slowing down. Many economists predict that with the tiered systems as well as the second lockdown in England will see GDP shrink in the final quarter of 2020. Therefore, it’s frustrating that the government hasn’t listened to the housing market’s concerns to consider an extension or a tapered end to the SDLT holiday when the housing industry plays such an important role in the economy.
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