According to The Times, the extension will be announced in next week's budget, with the Chancellor confirming as part of his plans that the deadline will be moved from the 31st March to the end of June.
The chancellor has been urged to push back the deadline amid a heated campaign by property pofessionals and economists who argue that many people have been left scrambling to complete their transactions before the end date.
The current rules state that the stamp duty threshold has been temporarily raised from £125,000 to £500,000 for property sales in England and Northern Ireland. In Scotland and Wales, it was increased to £250,000.
The scheme has been highly successful, with think tank the Centre for Policy Studies, reporting house sales had increased to their highest level since before the 2007 financial crisis.
The CPS has urged the government to either permanently increase the threshold on primary residences to £500,000 or abolish it altogether.
Yesterday, we reported that The Building Societies Association, have called on the Chancellor to taper the end of the scheme, allowing those who are already in the process of buying a new home to complete with benefits.
According to the BSA, a tapered end of the Stamp Duty holiday would allow any house purchase where the mortgage approval has been granted by the end of March, an additional three months to complete while still benefiting from the rate reduction. In addition to supporting homebuyers who are likely to have budgeted based on the Stamp Duty saving, the taper will also ensure that lenders and conveyancers are able to manage operational pressures in a Covid-secure way.
Rightmove have been crunching the numbers on the back of this latest rumour to see what effect it could have.
According to their data, the portal estimates an additional 300,000 property transactions in England could benefit from the tax saving, based on previous HMRC data.
If an additional 300,000 transactions made it through, buyers could save £1.75bn in total. Based on the current sales that have been agreed in England, 80% would pay no stamp duty due to this holiday.
There are an estimated 628,000 sales in total still currently in the legal process across Great Britain, including those that were agreed last year and those that have been agreed so far this year.
Currently, Rightmove estimates that 100,000 buyers who agreed on a purchase last year are set to lose out if the deadline stays as 31st March.
Mark Hayward, Chief Policy Advisor, Propertymark, comments: “Today’s speculation that the stamp duty holiday will be extended is good news for the property sector. Since the holiday was first announced, we have continually worked to galvanise the industry and lobby Government to rethink these timings due to our concerns that a cliff edge in March could cause thousands of sales to fall at the final hurdle and have a knock-on and drastic effect on the housing market which has recovered well from the Covid-19 slump.
"However, extending the holiday until June will create another cliff edge. We know from our own research that the majority of estate agents expect to see an increase in the number of failed sales if the stamp duty holiday ends at a cliff edge so we need Government to consider a tapered end to the holiday so that buyers aren’t forced to pull out at the last minute and the property market can continue to thrive.”
John Phillips, national operations director, Just Mortgages and Spicerhaart, said: “This proposed extension shows the importance of the housing market to the UK economy. It will certainly help ease the burden on some in the chain looking to rush deals through.
“However, this solution only kicks the can down the road. There have been discussions of a cliff edge with chains collapsing if they didn’t get over the line in time, but we don’t anticipate a sharp drop in activity whenever the holiday ends.
“The market has been predominantly driven by changing requirements. With millions now working from home, space for a desk, in some cases two, has moved up the priority list. People have also been looking for outside space as a result of the lockdowns. The lockdowns have also helped some to save a larger deposit. Also, by removing the need for a commute, people have looked to move out of the city.
“This latest announcement along with the confidence brought by the vaccine should help keep the momentum the market has built going for another few months. The end to the holiday, whenever it falls, will be a speed bump in the road. The market will slow down as we approach it, but will speed up again when we are past it.”
John Eastgate, Managing Director of Property Finance at Shawbrook Bank, comments: “If confirmed, an extension to the stamp duty holiday will deliver a soft landing for those transactions already in the pipeline and fearful of missing the current end date.
“However just changing when it ends doesn’t tackle the challenge of how to deliver a graceful and managed exit from an incentive that has served its purpose. The market has shown itself to be resilient. Homeowners and investors can look to the future with more certainty. Strong demand and limited supply will underpin house prices through the remainder of the year and over the long-term, so there is no merit in holding off if you’re thinking of buying.”
As you would expect and true to form, the Treasury is remaining tight-lipped and has said they cannot speculate on tax ahead of fiscal events.
