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We have just agreed the sale of our home and the purchase of a new one costing £600,000, and there is no chain beyond these two transactions.
We had been working on the basis that there was no way we would benefit from the stamp duty holiday, but I have now read that it could be extended for three months.
Would we be able to get the deals done in that time and benefit from an extended break if it comes, and when would that be announced? Via email
Deadline day: Home buyers are hoping the stamp duty holiday will be extended past 31 March
Helen Crane, This is Money, replies: With a potential saving of up to £15,000, it is not surprising that you are keen to take advantage of the stamp duty holiday if at all possible.
The temporary waiving of the unpopular tax was introduced by chancellor Rishi Sunak in July 2020, and applies to the portion of any property sale under £500,000.
The holiday was set to end on 31 March. But now, it has been reported that the deadline will be extended for three months, taking it up until the end of June.
The Treasury has not confirmed anything yet, and it is likely we will have to wait until the Budget on 3 March for that confirmation. It also remains possible that it won’t happen at all.
We also don’t know who will be eligible for the extended holiday, if it is announced. For example, it may not be as simple as exempting all property purchases before that date.
If the motivation is to avoid a ‘cliff edge’ where property market activity suddenly plummets on the day the stamp duty holiday ends – or just kicking that problem three months down the road – the Treasury could decide that only people who have reached a certain point in their transaction can benefit.
For example, perhaps making only those who have had a mortgage offer on a specific property, or exchanged contracts, able to benefit from the extended deadline.
It could also taper the level of relief available over the three-month period.
Alternatively, such rules could throw up so many compications and edge cases, that the Chancellor might decide a blanket extension is better – or even heed calls to make a cut permanent.
There are plenty of unknowns. But assuming the tax holiday is extended – and that your transaction is eligible – what are your chances of completing in time?
Happy holidays: The tax break has saved home buyers thousands of pounds in some cases
Generally, the whole process from listing a house for sale to completion takes about six months.
I am assuming from your email that you have already had your offer accepted on your new home, have a mortgage agreement in principle and are now in the conveyancing and survey stage of the process – and that the buyer of your current home is in the same position.
In normal circumstances, the period between making an offer and completing takes between six and 12 weeks on average. In your case, this would give both parties time to complete and still take advantage of the stamp duty holiday.
However, the whole process of buying or selling a house has been subject to delays since the housing market reopened after the first national lockdown, in summer 2020.
This was because there was a backlog of people trying to complete their sales after the market was closed for eight weeks, as well as new buyers and sellers entering the market because they wanted to take advantage of the stamp duty holiday.
You do still have a chance of completing before the new deadline, particularly as you are not in a long chain.
But it is impossible to say exactly how long your sale might take.
This will largely be determined by the workload of the conveyancers, surveyors and mortgage lenders on both yours and your buyers’ side; whether any issues arise with either property; and whether there are disagreements between you and the buyer.
To get an idea of what you might be able to expect, speak to your conveyancing solicitor and find out how long the process is taking on average.
You can also help to speed the process along by making sure you have any documents you will need to hand, responding to any requests as quickly as possible, and checking in with your conveyancer and estate agent regularly.
This is Money asked Martin Bikhit, managing director of estate agent Berkshire Hathaway HomeServices Kay & Co, and Donall Murphy, residential conveyancing partner at Russell-Cooke, for their thoughts on whether or not you will beat the stamp duty holiday deadline.
Martin Bikhit, managing director of Berkshire Hathaway HomeServices Kay & Co comments: The news that the stamp duty holiday will be extended for a further three months is most certainly welcome.
Martin Bikhit says there is the possibility that the stamp duty relief could be tapered
On the face of it, if this turns out to be the case, you should indeed have time to benefit from the extended holiday – but be aware that sales can take very different lengths of times to complete, given they can be of varying complexities.
A freehold sale is generally more straightforward than a leasehold sale, where enquiries of landlords and building managers can cause delays, so it’s important your solicitor is ahead of the curve on this one.
The thing to be wary of is that, until this is actually announced in the Budget, we will not know exactly what the extension means.
Hopefully they will keep it at as it is, in that there is no stamp duty to pay up to £500,000, but there is the possibility that they may taper it over a three month period.
As always the devil is in the detail, but this should be a welcome benefit to you either way.
Donall Murphy, partner in the conveyancing team at law firm Russell-Cooke, says: It is likely that any announcement on stamp duty land tax will be made during next week’s Budget.
If the current stamp duty holiday, which means 0 per cent liability for the first £500,000 of a purchase price, is extended by an additional three months, then theoretically there should be enough time for you to complete your sale and purchase and for you to take advantage of the concession.
However, that will depend on how quickly the conveyancing can be successfully concluded. As you have probably discovered, there are very many moving parts in the process and therefore much scope for delay.
Donall Murphy of law firm Russell-Cooke says that there is ‘much scope for delay’ when buying a house at the moment
Some local authorities are experiencing delays in processing their searches that form part of the process.
Similarly, there are also delays in surveys being produced and also mortgage offers being issued.
The current rush to beat the SDLT deadline has created a bottleneck effect for most involved in the conveyancing process.
It is unknown if the chancellor is going to extend the current stamp duty regime for three months or if, as some commentators have speculated, it will be a gradual tapering of the concession finally ending at the end of June.
I suspect all consumers would prefer to take advantage of the full concession. But would any extension of time create yet another cliff edge for new buyers who find their properties after the Budget?
As it currently stands, there are financial risks to a buyer if completion is delayed beyond the end of March because a party in the chain has to self-isolate or contracts the virus which results in completion being delayed until April or beyond.
The buyer would then lose out on the stamp duty concession if it is not extended beyond the end of March. That could be a huge problem if the buyers had not budgeted the additional required funds.
As the same could apply at the end of an extension period, it may be more beneficial to allow those buyers who have exchanged contracts (as opposed to completed the transaction) prior to the end of the stamp duty holiday period to benefit from the concession, even if completion takes place after the end of March or June – whichever is to apply. This is what happened with previous stamp duty rate changes.
Many consumers and stakeholders in the conveyancing process will be keeping their eyes open and ears peeled next Wednesday.
Helen Crane, This is Money, adds: Unfortunately, it looks like you will need to wait until the Budget on 3 March to get some clarity on your situation.
If the stamp duty holiday is indeed extended, you have a chance of completing your house sale and purchase in time to benefit – but given the delays in the process, it is by no means a sure thing.
It would be wise to discuss this with your buyer, and also the vendor of the home you are buying – firstly to gauge whether anyone might pull out of the transaction if they did not meet the deadline, but also to see if there was any scope for a small reduction in the purchase price to make up for the fact that you will need to pay stamp duty.
Above all, try to remember that this is a property you will hopefully be living in and enjoying for several years – and that should compensate for any short-term losses.
I wish you well with the purchase of your new home.
