SDLT: the holiday the housing sector would like to extend

03 Mar 2021

The big question for our developer clients in recent months has been whether or not an extension to the Stamp Duty Land Tax (SDLT) holiday would be confirmed in the Budget.      
 
The SDLT threshold was temporarily raised from £125,000 to £500,000 for residential properties in England and Wales in July 2020, and was due to end on 31 March 2021. Today’s Budget (03 March 2021) has just confirmed that the suspension will be extended to 30 June 2021 for the £500,000 relief, after which the starting rate of SDLT will reduce to £250,000 until the end of September 2021, when it will revert to £125,000.
 
The SDLT holiday was followed by a frenzy in the housing market.  The Office for National Statistics has reported booming house price rises of 8.5 % during 2020, with the average house price reaching a record high in December 2020.  
 
Since SDLT (and its predecessor, Stamp Duty) was introduced there has always been a minimum threshold at which the tax kicked in.  However, with seemingly constantly increasing house prices, the thresholds have not kept pace with rising values and more and more transactions are caught by the tax.  There is an argument that making the holiday a permanent extension would realign the brackets to reflect the increase in property prices that we’ve seen over the last two decades.
 
It is a tricky juggling act as the revenues raised by Stamp Duty Land tax are staggering - £11.55bn between 2019 to 2020.  However, the government is only too aware that a buoyant housing marking keeps large sectors of the economy turning, at a time when other parts of the economy are severely restricted, if not closed.
 
The other issue faced by our clients is whether the current boom in the housing market is sustainable growth, or a micro-bubble fuelled by the SDLT holiday. Landowners will always seek higher prices for their land, but our clients are naturally cautious and do not want to be caught out by over-paying for a site.  
 
One way we have helped our clients mitigate this risk is by advising them on ‘Open Market Value’ based option agreements or promotion agreements where the price is calculated using agreed criteria to determine what is the market value of the property at the time of the sale.  Both parties have the comfort of knowing that the price will reflect the market at the time the sale completes and neither will be disadvantaged by changing market conditions.
 
For further information, please contact a member of the team.
 

Further reading

Business and divorce: what to know if going into business with your spouse

Blog
30/01/2023
When going into business with a spouse, you do so without expecting to divorce. However, it is wise to consider this from the outset and plan for it, just in case
Read more Read

Pre-Nuptial Agreements: Part 1 – to have or not to have?

Blog
27/01/2023
Should you get a Pre-Nuptial Agreement? Nigel Winter discusses the answer to this question in the first of a series of blogs on the subject
Read more Read

US Attorney General Merrick Garland files Anti-Trust Suit against Google

Blog
25/01/2023
The tech giant is accused of buying up competitors. Google has stated that it does not hold a monopoly in the relevant market
Read more Read

DMH Stallard advises CGR on the acquisition of John Binns & Sons Ltd

Blog, News & PR
25/01/2023
“JB Springs is a fantastic opportunity for CGR to establish a first base in the UK. DMH Stallard played a key role helping us to close the deal.”
Read more Read
  • Brighton - Jubilee St

    1 Jubilee Street

    Brighton

    East Sussex

    BN1 1GE

  • Brighton - Old Steine

    47 Old Steine

    Brighton

    East Sussex

    BN1 1NW

  • Gatwick

    Griffin House

    135 High Street

    Crawley

    West Sussex

    RH10 1DQ

  • Guildford

    Wonersh House

    The Guildway

    Old Portsmouth Road

    Guildford

    Surrey

    GU3 1LR

  • Hassocks

    32 Keymer Road

    Hassocks

    West Sussex

    BN6 8AL

  • Horsham

    Ridgeland House

    15 Carfax

    Horsham

    West Sussex

    RH12 1DY

  • London

    6 New Street Square

    New Fetter Lane

    London

    EC4A 3BF

  • Make an enquiry

    Make an enquiry

    Message

    Or head to our Contact us page