Rishi Sunak will soon set out his economic recovery plan following a year of lockdowns, furlough, and loss across the UK. The Budget, which will take place on March 3, is currently thought to contain an extension to the Stamp Duty holiday, which has been in place since the market reopened following the end of the first lockdown in summer 2020.
This year has seen a significant increase in house sales thanks to the flagship economic policy, which has axed the tax bill on purchases up to £500,000 and reduces it on homes above that price.
However, it is now widely understood Mr Sunak will extend it for three months until the end of June – the holiday was originally due to end on March 31.
A natural rush to take advantage of the holiday, which amounts to a saving of £15,000, had led to delayed and backlogs in the processes, will hopefully be relieved by the move.
Despite the overall misery of 2020 and the ongoing crisis, the housing market has recovered extremely well considering it was out of action for a huge chunk of the year, defying the wider economic downturn.
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Prices climbed by 8.5 percent in 2020 – but the end of the holiday could spark a stagnation or drop off in prices.
Ray Harriot, Founder of Reliable Property Group, explained that it is currently unclear which way prices will go.
He told Express.co.uk: “Although many hope the budget on March 3 should bring some clarity, there will still be a great deal of uncertainty surrounding the market and which direction prices will go.
“If unaddressed, many buyers will sit on their hands, unsure of the right time to strike.
Tom Brennan, from TED Mortgages in Swindon, told Express.co.uk: “The relief for First Time Buyers in the last few years has been of real value to people wanting to get on the housing ladder, although not a great use to those people who are wanting to move up.
“The system needs to be fairer across the board and not just aimed at first-time buyers as without home movers, there are less options available to everyone else.
“If this can be done we may see a continued “busyness” to the whole industry.
“Giving people more options is even more important now as many employers are adapting to remote working so being able to change location with less cost would surely benefit people who want to be able to move, especially if you’ve been shacked up in an overpriced, pokey flat for the last 12 months.
“By removing Stamp Duty for everyone up to a limit, it will more than likely inflate prices for a period of time, but at some point this will have to level out and property prices will stagnate to a value that is in line with supply and demand, but when that would be I do not know!”
Mr Harriot continues: “Alongside scrapping stamp duty for properties under £500,000, a new Help to Buy scheme seems like the most pragmatic approach the Government can take in order to bring security to the housing market while opening the doors to first timers.
“This could be done by underwriting some of the deposit for new homeowners, stimulating the market for the next 10-15 years.”
“Although the rise in house prices might start to level off when the relief ends, the longer-term impact of the stamp duty holiday is unlikely to be massive.
Mark Langshaw from onlinemortgageadvisor.co.uk said: “During past times of economic turmoil, stamp duty relief has proven to be a short-term solution, so further measures will be needed to keep the marker strong going forward.
“The biggest issues the market is facing will always be the same regardless of how much Stamp Duty costs, namely demand outstripping supply and the need for more social housing stock.
“Another immediate concern is whether we’re experiencing tomorrow’s jam today as buyers who wouldn’t normally have completed until much later have rushed out to beat the stamp duty deadline.
“That said, we’re feeling positive and optimistic about the market this year since funding and opportunities are in place to see us through when stamp duty relief unfreezes.”