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The uncertainty that surrounds the stamp duty holiday
The stamp duty holiday has caused something of a stampede for property sales in the UK, but will it last, will it be extended, or will a cliff edge cause a property price slump?
Unless you’ve been living on Mars, you will know that the stamp duty holiday introduced earlier in the year by Rishi Sunak has boosted the property sales market and you will know then when it comes to an end on the 31
st of March next year there could be a major problem.
Two questions on a lot of peoples’ mind: will you be able to take advantage of the tax saving on property sales starting or going through right now, and will the benefit be extended post March 31st?
“The motivation to remortgage can clearly be seen based on the rate differential between the average two-year fixed rate at 2.49 percent and average SVR at 4.41 percent. Within the first two years the amount that can be saved on repayments between the average SVR and two-year fixed average rate is over £3,600 – which is based on a £150,000 mortgage over a 25-year term on a repayment basis. Borrowers about come off a five-year fixed rate mortgage may also wish to find a new deal, as falling onto the average SVR can see their repayments rise, and five-year fixed rates are lower today at 2.69 percent on average compared to 3.27 percent in 2015.
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The Stamp Duty Holiday was implemented by the Chancellor Rishi Sunak as a way of offering a financial helping hand amid the COVID-19 pandemic. Usually, the Stamp Duty Land Tax (SDLT) is applicable in England and Northern Ireland, and must be paid on property or land which is over a particular price. To alleviate a financial challenge for homebuyers, Mr Sunak has set the threshold at £500,000, but only until March 31, 2021.
This was confirmed by the government after a recent petition proposed to extend the support measure by six months.
The petition was published on the official Parliament website and called upon the government to “stabilise the housing market” through a six month extension.
It garnered significant support, at 22,205 signatures at the time of writing, and triggered a government response.
However, signatories did not receive the answer they were hoping for, with the government rejecting calls to extend the scheme at present.
Stamp Duty Holiday: Government rejects plans to extend support - ‘temporary relief’ (Image: Getty)
Its response read: “The SDLT holiday was designed to be a temporary relief to stimulate market activity and support jobs that rely on the property market.