Reasons For and Against the Stamp Duty Holiday Extension

Reasons For and Against the Stamp Duty Holiday Extension

The expected announcement for or against extending the stamp duty holiday is now days away. The tax discount was put into place last summer to bring more interest to the housing market, a critical sector of the UK economy. It worked as many first time buyers and home movers benefitted by the possible up to £15,000 savings. The higher demand has caused delays in the property buying process which is also impacted by work restrictions due to the pandemic, and it has pushed up house prices.

The stamp duty holiday deadline is 31 March. Currently there is speculation that there will be a small extension of the tax discount for another six weeks.

If the extension occurs it is expected that another boost to the market will follow. Those that were on the fence as to buying and those home buyers that feared they would not make the deadline will likely take advantage of the extension quickly.

The demand on the housing market has pushed house prices upward. It is expected that many sellers are waiting for the traditional spring market in which buyers are usually abundant as compared to the winter months. However, demand is strong now, interest rates are low, and with a stamp duty holiday extension, sellers would do well to take advantage of the opportunities and take action to get their property in front of buyers.

If the demand is strengthened, yet sellers remain rare, then the already higher house prices will climb more. That is one reason why the government might not extend the stamp duty holiday no matter how much of a savings and incentive it would give buyers. House prices growing even more will put hopeful homebuyers further out of reach, especially first time buyers. Then with fewer buyers able to afford property the demand will weaken and the pandemic impacted economy will suffer without the strong resilient housing market that has existed throughout the pandemic and lockdowns.

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