After a record-breaking December for residential sales here at Radcliffe & Rust, we are excited for a busy and prosperous 2021. However, after an unexpected and unprecedented 2020, there are lots of questions in the residential sales market which are being asked, the main one being could the stamp duty holiday be extended? Below, we hope to provide you with more information on this matter.

What is stamp duty?

Stamp duty is a tax which must be paid by homebuyers when buying a property that is over a certain value. This property can be freehold, leasehold (new or existing), shared ownership or if you are transferred land or property in exchange for payment.  The monetary amount and level of stamp duty (which is calculated as a percentage of the property’s value) increases depending on the value of the property. The minimum value for stamp duty (after the stamp duty holiday ends in 2021) is £125,000 – any property below this price means that no stamp duty would be payable.

What is the stamp duty holiday?

The stamp duty holiday was announced by the Government in July 2020. This announcement meant that no stamp duty would be payable on house purchases up to £500,000 saving buyers up to fifteen thousand pounds (on a purchase of £500,000) and played a part in causing the housing market to burst to life after 2020’s lockdown, and various restrictions which almost brought the market to a halt. The results of the stamp duty holiday were almost immediate. Between July and September 2020, the Government reported that property transactions had increased by 20%, which was a fantastic indicator that the stamp holiday was working and providing money for the economy as well as generating jobs.

What effects has this incentive had on the property market?

Due to this huge saving for people looking to move home, the property industry is thriving and levels of interest in available properties has soared to the point that the demand from buyers has outstripped the supply of available properties. In some cases, this has meant that properties are selling for well above the asking price due to so many interested parties. 

The surge in people wanting to move to a new property has meant the number of mortgage applications and workload on solicitors has increased dramatically. Mortgage lenders are being particularly strict with their lending criteria due to the current lockdown restrictions meaning many people (particularly those who are self-employed who cannot work during the lockdown and those who work in the hospitality industry) are finding it much harder to obtain a mortgage which is causing long delays. This factor combined with solicitor’s workload being so high has meant delays in the house buying process which are unfortunately out of buyers’ and sellers’ control.

This has naturally meant that some people wanting to take advantage of the government’s Stamp Duty holiday could fall into a trap of missing out due to the aforementioned delays.

When is the stamp duty holiday due to end?

The planned end date for the stamp duty holiday is 31st March 2021.

Do we think the stamp duty holiday be extended?

We wish we knew the answer to this question, but it is impossible for anyone to know for definite until the Government make an official announcement. Because there have been so many delays for surveyors, searches, mortgage approvals and solicitor work levels, the average property transaction has increased to 16 weeks (and in many cases longer) and the various parties are struggling to meet demand. If property sales continue to take this long to complete and the deadline of 31st March isn’t reached in time, thousands of house sales could fall through. Members of the property industry have contacted the Government asking for an extension and there has also been a petition to extend the tax break by 6 months which has been signed by over 100,000 people (and therefore will be debated in the House of Commons).

What are our plans at Radcliffe & Rust for 2021?

Here at our Cambridge office, we’ve just added a large number of properties to our ever-expanding lettings portfolio and the demand for valuations for our sales and lettings teams is at an all-time high. Because of this, we are looking to expand our committed and experienced team with a dedicated Property Manager who will manage our rental properties. If you think this could be the role for you, please visit our careers page for more information.