Rishi Sunak considers extending the stamp duty holiday to prevent buyers dropping out of home sales if they miss the March deadline
- The Chancellor fears transactions worth billions are at risk with current deadline
- He is considering extending the holiday until mid-May to help buyers
- The current March 31 deadline could cause a ‘completion trap’ in the market
Rishi Sunak is considering extending the stamp duty holiday by an extra six weeks to stop buyers dropping out of sales if they miss the deadline.
The Chancellor fears thousands being caught in a ‘completion trap’ and is looking to extend the holiday until mid May, past the current March 31 deadline.
A cross-party debate heard earlier this month that transactions worth billions of pounds were at risk unless the tax cut was extended, with some deals already falling through.
Rishi Sunak is considering extending the stamp duty holiday by an extra six weeks to stop buyers dropping out of sales if they miss the deadline
There have been calls to implement a six-month extension but Sunak believes this would have a ‘gratuitous’ impact on tax receipts, The Telegraph reports.
A source said: ‘It is certainly the case that a lot of people would be caught in the completion trap if the holiday were to end when it is due to.’
The threshold for paying stamp duty was raised from £125,000 to £500,000 in July in an effort to boost the housing market and the economy.
But the buying process has been hampered by severe delays, with lockdowns, staff absences and increased demand hindering solicitors, mortgage lenders and search departments.
It has led to some buyers waiting for up to 100 days for the conveyancing process to go through.
This has added to the fears that many sales would fall through by the March 31 deadline.
The threshold for paying stamp duty was raised from £125,000 to £500,000 in July in an effort to boost the housing market and the economy
Mortgage lender Paragon estimate that almost two thirds of buyers nationwide, representing sales worth £1.5billion, are in a chain where someone is dependent on completion by the end of next month.
On Thursday, the Help to Buy equity loan scheme was also extended until the end of May.
Ministers also ruled out this week introducing a new property levy to replace stamp duty and council tax after a study found it could lead to higher bills in the South East.
MPs were told last month the idea of introducing a ‘proportional’ tax based on home values was ‘under review’.
But a Government spokesman said: ‘We have no plans to introduce a new form of annual property tax.’
It comes as Sunak also considers implementing a £6billion ‘stealth tax’ by freezing personal income tax allowances.
Millions would hand over more money to the government with the measures which could be announced in next month’s Budget.
Income tax thresholds may not see annual increases, which are normally aligned with inflation.
This would mean the average person could be forced to pay a higher tax rate on a larger proportion of their income.