MPs to discuss stamp duty holiday today, but will it be extended?

At 4:30pm today, MPs will discuss a petition relating to stamp duty land tax relief during the Covid-19 outbreak.

Related topics:  Finance News
Rozi Jones
1st February 2021
Houses house of parliament commons government govt gov
"Two months from the end of the holiday, it feels like any government U-turn would need to be particularly sharp."

The petition, titled ‘Extend the Stamp Duty Holiday for an additional 6 months after 31st March 2021’, has more than 124,000 signatures.

Speculation has been building that the government may extend the stamp duty holiday beyond 31st March, but most industry experts believe that any extension would be short term and would only apply to pipeline cases.

The latest data from Knight Frank shows that there was a 57% increase in the number of exchanges in January, a 43% increase in the number of offers accepted and an 18% rise in new prospective buyers, showing that there is still momentum in the market, no doubt spurred on by the closing window of the stamp duty holiday.

But is today’s Parliamentary debate likely to sway the government’s thinking? Unlikely, according to Sean Randall, a partner at Blick Rothenberg and chair of the Stamp Taxes Practitioners Group. He said: “My sense is that it was considered but won’t happen, especially if the housing market stays open. I would always allow for a last-minute U-turn but it is helpful to think of the holiday as one part of a package of measures to help the economy not just the housing market. Some deals will be impacted but a lot of people will just renegotiate.”

Knight Frank predicts that if the UK avoids a huge spike in its jobless numbers, there is less chance of an extension because the evidence is that the economy doesn’t need it. Last week, the unemployment rate hit 5%, which is "still far from the worst case scenario", according to the estate agency.

Additionally, if there is a spike in the rate of Covid infections which caused a partial or full closure of the housing market, the government could be forced to re-think the holiday, however infection rates are currently on a clear downwards trajectory.

Tom Bill, head of UK residential research at Knight Frank, commented: “Stamp duty accounts for around £12 billion of the government’s £635 billion annual tax revenues. It is not a huge slice but every bit of revenue is significant as the government attempts to re-balance the books. The bandwidth for a wider re-think of property taxes is unlikely to exist at present.

“However, there is some pressure to extend the holiday from the so-called ‘red wall’ group of Tory MPs. Furthermore, the conveyancing system is creaking under the pressure of high deal volumes and stories of transactions collapsing at a time when labour market mobility is under scrutiny may increase the pressure on the Treasury. That said, two months from the end of the holiday, it feels like any government U-turn would need to be particularly sharp.”

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