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240K buyers could miss Stamp Duty holiday deadline
High demand from buyers this year has led to mortgage and purchase delays, but those who don’t complete on time could pay thousands in Stamp Duty
The Stamp Duty holiday cut off date next year could leave up to 240,000 home buyers with an unexpected bill, according to Yorkshire Building Society.
The mutual estimated that’s how many buyers could potentially miss the deadline and end up having to pay Stamp Duty when they were expecting not to.
End of the holiday
The Government announced a temporary Stamp Duty freeze on property purchases up to £500,000 in July, which is set to come to a hard stop on 31 March 2021.
As it stands, to benefit from the tax reprieve, buyers must have completed their sale by the deadline.
But the Society estimated there could be 239,964 sales which have been agreed by the deadline, but are yet to complete.
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These buyers could be left with an unexpected tax bill of £2,400 on an average priced home, rising to £15,000 on properties worth £500,000.
Stamp Duty taper
Instead, the Society is calling for the introduction of a Stamp Duty taper, which would allow any agreed property purchases which have had a mortgage approval granted by 31 March until 30 June 2021 to complete their sales with the benefit of the temporary Stamp Duty reduction.
New mortgage commitments approved after 31 March would not benefit from the reduced rates.
Nitesh Patel, strategic economist at Yorkshire Building Society, said: “The Stamp Duty holiday is coming to a dead halt on 31 March, 2021, which may not give enough time to for buyers and sellers with agreed sales and mortgage approvals, to complete.
“This may cause issues for home-buyers, who may need to find thousands of pounds for an unexpected tax bill. It could even cause some transactions to fall through.
“We therefore would like to see a stamp duty taper, which would give a three-month grace period to sales which are already agreed with a mortgage in place.
“This is also very likely to be an extraordinarily busy period for mortgage lenders and other professionals in the house-buying industry. Social distancing is likely to remain in place for businesses until the deadline, allowing an extra three months to help for buyers who have mortgages approved and sales would be a sensible solution.”