Are you ready for a Stamp Duty holiday extension?

by | Wednesday 24th Feb 2021 | Mortgage Insights

There has been speculation in the national media in recent days that the Chancellor will use his Budget statement on March 3 to announce a 3-month extension to the Stamp Duty holiday.

The initiative was introduced in July of last year to counteract the three-month hiatus in housing transactions between March and June caused by the anti-Covid restrictions implemented by the Government on March 23 last year.

Under the terms of the holiday, which is currently in place until March 31, residential buyers paid no Stamp Duty – or Stamp Duty Land Tax (SDLT) to give it its proper name – on transactions up to a value of £500,000.

It was intended to give the UK residential property market a kickstart and, by many measures, it had the desired effect – though there are also those who believe that further inflating what was an already buoyant pre-Covid market will only serve to steepen what they see as an inevitable fall.

According to Sky News, HMRC figures show that just under 130,000 property transactions were concluded in December 2020 compared to 87,000 in the same month six years earlier.

The same report suggests that under the scheme, the average time it took to sell a property fell to 49 days in November 2020 compared to 67 days in November 2019.

The reports suggest the Rishi Sunak will act now to extend the scheme to enable buyers to complete transactions and benefit from the holiday – with property website Rightmove predicting that without an extension up to 100,000 buyers could miss out.

Regardless of the consequences, what this now means for buyers is that there are now an additional 12 weeks – 84 days – in which to get a home purchase over the line and save up to £15,000 in tax.

This is almost certain to be good news for both buyers and sellers alike, at least in the short term.

It may mean that demand will remain at a high level and with supply unlikely to meet it, many buyers may well be prepared to invest some of their expected tax savings in paying slightly more for a property than they might have done otherwise in order to secure the purchase.

If you were considering moving but decided to shelve those plans because it was becoming increasingly unlikely you would get the deal over the line by March 31st, the prospect of having the extra time to complete a transaction may spur you back into action.

The key question, of course, is are you ready?

As I have written previously, the biggest factor in any house purchase is often in securing the mortgage you need to buy your dream home.

It’s a barrier that isn’t just limited to whether or not a mortgage broker will lend to you – it’s also about your credibility as a buyer.

If you call an estate agent and ask to view a property they’re marketing, the chances are you’ll immediately be asked two questions: Do you have something to sell and if so, is it on the market? and Do you have a mortgage in place?

Side view of a young couple looking at window display at real estate office

If you do have something to sell there are some agents won’t even consent to a viewing unless you can answer ‘yes’ to one or, preferably, both those questions, and that’s because in a seller’s market – which is a market where demand for property outstrips supply – they can afford to turn away anyone who isn’t what they consider define as ‘proceedable’.

Having your current property on the market (or, even better, already sold) and having a mortgage agreed in principle tells the agent that you’re serious about the transaction and that all other things being equal, you’re more likely than not to complete the purchase.

Getting a mortgage in principle is not the same as having a mortgage offer. An in-principle agreement simply says that based on your headline income, outgoings and debt, and subject to more in-depth financial checks, a lender would be prepared to offer a certain amount as a loan.

By working with a professional mortgage adviser, who will have a much better understanding of the product and lender options in the market, you have a better chance of getting an agreement in principle that is likely to translate into a concrete mortgage offer.

A professional mortgage broker will be able to advise you on which lender and product is best suited to your needs, and will be able to organise your agreement in principle whilst at the same time getting to work collating all the documentation that will be needed to support your formal mortgage application.

With this in place, and ideally with a conveyancer waiting in the wings to start the legal process as soon as you have an offer on a property accepted, you’ll have a much better chance of completing your move before June 30 and reaping the benefits of the Stamp Duty holiday.

So, if you think a decision by the Chancellor to extend the holiday scheme is likely to be the deciding factor in whether or not to move, it might be worth talking to a mortgage adviser now – it won’t cost you anything, but it may just put you ahead of the curve.

Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority
Your property may be repossessed if you do not keep up repayments on your mortgage.
Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.

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