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New stamp duty holiday rules: The house buying changes Rishi Sunak announced in his Budget
3 March 2021, 16:13 | Updated: 4 March 2021, 12:16
Chancellor Rishi Sunak has announced the stamp duty holiday for house buyers is being extended until June 2021 as part of his Spring Budget.
Rishi Sunak has confirmed in his Budget 2021 the stamp duty holiday will be extended until June 2021 along with new house buying rules for after then.
He told MPs it was “a policy that gives people who can’t afford a big deposit the chance to buy their own home”.
He added: “As the prime minister has said, we want to turn generation rent into generation buy.”
READ MORE: Budget 2021: Key points at a glance
But what exactly were his changes to stamp duty? When does the holiday end? And which house purchases will be impacted by the stamp duty changes?
When will the stamp duty holiday now end?
The stamp duty holiday, which was introduced last July, had been due to end on March 31.
It will now remain until the end of June and then there will be a "tapered" period running until September.
Which purchases are affected by the stamp duty changes?
Mr Sunak announced the Government will maintain the temporary increase in the "nil rate" stamp duty band at £500,000 in England and Northern Ireland until June 30.
From July 1, the nil rate band will reduce to £250,000, until September 30.
It will then return to its "normal" threshold of £125,000 from October 1.
An estimated 45% of transactions in England will still be exempt from stamp duty in the tapering period.
What could the stamp duty announcement mean?
Rightmove said an additional 300,000 property transactions in England could get through by the end of June and buyers could save £1.75 billion in total.
Within half an hour of Mr Sunak's announcement, the company said use of its mortgage calculator jumped by 85%, while overall traffic to Rightmove rose by 16%.
What has the immediate response been?
Rightmove property expert Tim Bannister said: "This three-month extension will come as a huge relief for those people who have been going through the sales process since last year and were always expecting to make use of the stamp duty savings.
"Our recent data shows one in five sales that were agreed in the same month the stamp duty holiday was first announced in July last year still haven't completed, so this additional time will make a big difference to help those stuck in the logjam complete their purchase in time before the new end of June deadline."
Richard Donnell, research director at Zoopla, said: "Buyers who are now looking for a new home could benefit from the full savings of up to £15,000 if they complete their sale within less than four months."
Zoopla said buyers in the South East, where house prices are often higher than average, are particularly likely to benefit from the extension.
Calls for a more long-term overhaul of stamp duty
Matthew Pratt, Redrow chief executive, said: "For a functioning housing market people have to move up and down the ladder, and the need to find significant sums of money can prevent those at the top of the property ladder from moving to a more appropriate home for their requirements, and freeing their current larger property up for a family.
"Sideways moves are often crucial for people who might be moving away for job or life stage changes, and the current stamp duty levels can stifle a choice which can massively improve people's lives and open up options."
Nitesh Patel, strategic economist at Yorkshire Building Society, said: "The hard stop scheduled at the end of September may just kick the can down the road for some buyers.
"Those who are mid-transaction may well face a similar situation of being confronted with an unexpected tax bill of thousands of pounds when the extension comes to an end, as well as disincentivising higher-value purchases.
"If the lowest stamp duty price threshold had been raised in line with house price inflation, no stamp duty would be paid on properties up to £195,000.
"This has disadvantaged those looking to move home to accommodate growing families, who have had to pay comparatively higher levels of tax, compared with 15 years ago, to purchase a similar property."