What are your options if you miss the stamp duty holiday?

Missing the deadline might mean you need to find extra money (Picture: Getty Images/iStockphoto)

Buying a house comes with many costs beyond the price tag on the property.

Stamp duty is usually one of the biggest to consider when setting a budget.

But anyone purchasing a house under £500,000 since last July has managed to avoid paying the hefty tax thanks to the stamp duty holiday introduced by Rishi Sunak in an attempt to kickstart the market after the first lockdown.

Initially, the holiday was due to finish at the end of March but an extension was announced earlier this year.

Sadly, tomorrow is the last day to make the most of the holiday. If your sale doesn’t complete by then, you may have to pay some stamp duty. From 1st July until 30th September, there are still some savings to be made though on the first £250,000.

With the opportunity to save thousands, many have jumped at the chance to avoid stamp duty and it’s sent the market soaring.

And as so many people try to buy a house in time for the deadline, many are facing delays.

Will Rhind, Head of Mortgage Advice at Habito said: ‘Since last summer, we’ve seen several months of record levels of property transactions as demand outstripped supply. 

‘The three-month extension to the relief – to the end of June – was projected to benefit over 100,000 additional property buyers. However, the level of demand has caused delays, and there will be homeowners who still miss out on the full relief due to circumstances outside of their control.’

What to do next

With the deadline set in stone, this week is likely to be very stressful for any buyers in the final stages.

In reality though, many still won’t have to pay stamp duty as the extension announced earlier this year will slowly taper out.

From July 1, properties under £250,000 will still be free of stamp duty, and you’ll pay 5% on anything between £250,001 and £925,000.

From October, the stamp duty rules will return to normal – you won’t pay anything on the first £125,000 of the property price but will pay 2% up to £250,000 and then 5% from £250,001 to £925,000.

Miles Robinson, Head of Mortgages at Trussle, said: ‘While 30 June has been much publicised as the ‘end of the stamp duty holiday’, it’s important to bear in mind that there is no longer a hard deadline.

‘With an average UK property price of £245,432, many buyers during this period will still not pay any Stamp Duty.

‘As such, the stamp duty holiday will continue to offer a huge incentive for some buyers and it is likely to continue to drive property price growth during summer, but perhaps more steadily.’

First time buyers will also continue to avoid stamp duty on the first £300,000, even when the holiday ends.

The market has been hectic in the last few months (Picture: PA)

For anyone trying in these categories, there’s no need to panic about the deadline.

Anyone not buying for the first time and paying over £250,000 has limited options if they can’t afford the extra costs.

Pete Mugleston, MD and Mortgage Expert for OnlineMortgageAdvisor, suggests the best thing to do is to negotiate.

He said: ‘Perhaps look to renegotiate your house price with the seller as they may be open to accepting the new offer to keep the process on track.

‘Make sure you complete by the September deadline as you’ll still benefit from a saving.’

You are both likely to lose money if the sale falls through and with the housing market constantly changing, they may not get the same price again so present it as being in their best interest.

Beyond that, your only option is to find the extra money needed or pull out of the sale altogether, regroup and try again with another property.

Should you start the buying process now?

Those who are ready to buy but have been waiting for the market to calm down a little may now expect prices to fall and think this is the time to make a move.

But the tapering out of the stamp duty holiday means that experts aren’t predicting a crash, like some did before the extension of the scheme.

Will from Habito added: ‘Recent data from ONS from April showed a slight slowdown in the rate of house-price growth, and we think that prices will come off a little as prospective homebuyers get further away from the date where they’d stand any chance to make any Stamp Duty savings, but also as more supply comes to market.

‘Sellers who might have been cautious to list their home earlier in the year – either for health reasons or lack job security – could find confidence from the continued vaccine roll-out, restrictions fully easing from next month and the economy bouncing back. 

‘Mortgage rates are still at historic lows – with no rate rise announcement from the Bank of England forthcoming, and the above-expectations performance of the jobs market is great news for would-be borrowers.

‘With many city-based firms confirming a flexible return to offices from July, the demand for larger homes with offices and gardens could continue to drive the market in commuter towns.

‘So, with mortgage availability good, demand staying high, and supply increasing, it’s likely the housing market and prices will remain very strong, though not quite at the frantic level we saw from November 2020.’

Miles from Trussle, also warns that it might already be too late for anyone starting now because of the huge backlog in the market.

He said: ‘Buyers beginning a property purchase now, have just over 92 days to complete their transaction. While this is not impossible, it will be difficult for many as the current completion time is approx. 144 days.

‘Pulling out of a housing transaction can be expensive and typically costs thousands in fees. Those starting a property purchase now should factor Stamp Duty into their costs to avoid any unwelcome surprises later down the line that might jeopardise their property purchase.’ 

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