Parliament will debate whether to extend the stamp duty holiday, after more than 110,000 people signed a petition calling for the change.
The tax break, which is set to end on 31 March 2021, was introduced in July to help restart the housing market after it ground to a halt during the first lockdown in spring.
It means that the first £500,000 of any property purchase is exempt from stamp duty, which can save buyers up to £15,000.
Home buyers have benefited from a stamp duty saving of up to £15,000 since July
A petition launched last year called for the holiday to be extended for a further six months, until the end of September.
Because the petition has now been signed by more than 100,000 people, government rules mean that it must be debated in the House of Commons.
The Government initially responded to the petition on 10 December.
It said: ‘The SDLT holiday was designed to be a temporary relief to stimulate market activity and support jobs that rely on the property market. The Government does not plan to extend this temporary relief.’
However, since then calls for it to be extended have increased – particularly since the start of the third lockdown earlier this month.
Dominic Agace, chief executive of AIM-listed estate agent Winkworth, backed an extension, but only for one additional month.
‘Insisting on a hard deadline seems crazy in a world where everything is changing all the time,’ he said.
‘People in the middle of selling their house, through no fault of their own, now face significantly higher costs than they agreed when they went under offer.
‘No one envisaged a second and third lockdown when the stamp duty holiday initiative was launched.
‘A one month extension to the end of April would help all of those currently progressing their sale.’
Prolonging the holiday would compensate for any delays in the system caused by the new lockdown, allowing more of those who had expected to benefit from the tax cut before the new restrictions to do so.
It could also serve to galvanise the property market if transactions started to fall.
The holiday contributed to the significant house price increases witnessed in the second half of 2020.
According to Nationwide, the average house price rose 7.3 per cent, or over £15,000, last year, reaching £230,920.
Asked by This is Money whether it planned to extend the stamp duty holiday earlier this month, the Treasury did not give a firm answer.
‘The temporary stamp duty cut is helping to protect hundreds of thousands of jobs which rely on the property market by stimulating economic activity’, a spokesperson said.
‘Its time-limited nature is what has encouraged people to take advantage of the scheme.’
A date has not yet been set for the Commons debate on extending the stamp duty holiday.
Separately, ministers and officials are said to be looking at long-term plans to replace stamp duty and council tax with a national property levy – although any changes would not be imminent.
