It was feared thousands wouldn’t complete their purchases before the deadline (Picture: Getty Images)
Chancellor Rishi Sunak has extended the stamp duty holiday by three months, giving the housing market a boost as the country emerges out of lockdown.
Around 88% of home purchases in England and Northern Ireland are currently exempt from the tax, after the Treasury raised the nil-rate band from £125,000 to £500,000 in July.
The move meant buyers could save up to £15,000 if they completed their purchases before March 31 this year, depending on the price tag.
But with hundreds of thousands facing delays in the system, the Chancellor was under pressure to extend the stamp duty holiday to stop them falling off a ‘cliff-edge’.
It is thought Sunak’s extension of the scheme, announced during his unveiling of the Budget today, is expected to cost the Treasury around £1billion.
Some feared that all an extension would do is kick the can down the road and leave another cliff-edge waiting later in the year.
But Sunak said that the nil-rate band will be £250,000 – double the standard level – until the end of September to smooth the transition, returning to the normal rate from October 1.
The stamp duty holiday meant 88% of homes in England and Northern Ireland were tax exempt (Picture: Empics Entertainment)
Rishi Sunak was under pressure to extend the tax break as it was feared the market wouldn’t be able to cope (Picture: REX)
The Chancellor also announced a new 5% deposit scheme for both current homeowners and first-time buyers as another measure to keep the market going.
According to Estate Agents Hamptons, 34% of sales agreed in January 2020 were completed by March 31.
But this year demand has almost doubled, with lockdown measures leading to a pent-up demand for homes.
This, combined with delays in the house-buying system, led to fears that many families would suddenly be caught short and have to find thousands of pounds.
In December The Guild of Property Professionals told the Sun that around a third of house sales were likely to fall through if the stamp duty holiday was not extended.
The initial move saw house prices boom to a new record high in December, with the average price hitting £253,374 at the end of the year – 6% higher than the previous year, the Telegraph reports.
A recent report by the Centre for Policy Studies (CPS) said the tax holiday had increased house sales to their highest level since before the 2007 financial crisis.
But growth started to slow down significantly at the start of the year, and it was thought the housing market wouldn’t be able to cope if tax break – a huge incentive for buyers – was suddenly pulled away.
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