The Stamp Duty holiday has given a significant boost to the property market and helped to drive demand and sales. But the Stamp Duty holiday is set to end on March 31. Although the end of March feels a long way off, remember that property transactions can take a few months to complete.
Delays are potentially even longer now due to backlogs in the system and Covid restrictions with viewings.
So if you want to avoid the stamp duty cost, act now! Get your mortgage over the line and potentially complete before March 31.
What is Stamp Duty?
Stamp Duty is a tax some people pay on residential property or land in England and Northern Ireland.
Until last summer, you paid a Stamp Duty of 2% for homes over £125,000 — or £300,000 for first-time buyers. Houses priced at over £250,000 to £925,000 had to pay 5%. But in response to the Covid-19 pandemic, the Chancellor changed the rates so there is no Stamp Duty to pay on homes up to £500,000.
You pay the tax on both freehold and leasehold properties, even if you do not need a mortgage to purchase. Anyone buying a second home still has to pay Stamp Duty costing more than £40,000.
In Scotland and Wales, each country uses different land transaction taxes instead of Stamp Duty.
Why you need to be quick
Once the mortgage market reopened after the first lockdown, the time taken between mortgage application and offer is now much longer.
The mortgage journey is not alone in facing delays, with conveyancers indicating that the time between offer and exchange is now taking three weeks, while the period between exchange and completion stands at one to two weeks.
Estate agents, meanwhile, said that the average time between receiving an offer on a property and completion has risen. Buyers are advised to keep in touch with their agent and their solicitor to add pressure to ensure the deadline is met.
What if I miss it?
If you miss the deadline then there is no need for despair, as industry experts think lower house prices will follow the end of the Stamp Duty holiday. They say this with the combination of increasing unemployment points towards reduced demand, so that could offset the cost of the tax.
Also, the property industry is pushing hard to ask Rishi Sunak to consider extending the Stamp Duty holiday. Although nothing has been decided yet, the fact the Chancellor has extended other support schemes gives a glimmer of hope.
Either way, if you want a mortgage adviser in the North East that tirelessly hunts for the best deal than any other, contact us today.
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