Chancellor Rishi Sunak has extended the stamp duty holiday until the end of June.
The chancellor confirmed in his Budget on Wednesday that anyone who purchases a property that completes by 30 June will not have to pay tax on the first £500,000.
He also said that the nil rate band will be £250,000 – double its standard level – until the end of September, in order to smooth the transition back to normal.
Sunak introduced the stamp duty holiday last July.
The tax break has helped peer-to-peer property lenders such as those providing development or buy-to-let loans as it boosted demand from buyers.
The holiday was meant to be a temporary boost to the housing market that would end on 31 March.
However, lockdown restrictions have made it harder to view properties and slowed down the conveyancing process, prompting calls for the holiday to be extended to avoid collapsed sales.
The peer-to-peer lending sector had repeatedly called for the extension of the stamp duty holiday, and for it to be reviewed by the government.
Property industry stakeholders had called for a tiered approach to the end of the stamp duty holiday, with Damien Druce, management consultant at Druce Consultancy, saying that “the shock and trauma the market would feel would be too much.”
MPs across all parties backed stamp duty reform with the majority wanting an extension during a parliamentary debate last month after a public petition gained more than 100,000 signatures.
In response to the Budget announcement, some property professionals have warned against another “cliff edge scenario” at the end of June.
“As expected, the Stamp Duty holiday has been extended, but the government has missed a gilt-edged opportunity to put in place measures to avoid another cliff-edge scenario in three month’s time,” said David Westgate, group chief executive of Andrews Property Group.
“Reducing the nil band rate from £500,000 to £250,000, while a better solution than simply cutting off the tax break on 30 June, could still result in a stampede of buyers rushing to complete before the deadline.
“A better solution, surely, would have been to allow transactions, where a mortgage offer has been granted before the deadline, to complete at their own pace.
“This would have avoided buyers dropping out of a transaction that’s in progress because they aren’t able to complete before the deadline.
“It would also have given conveyancers the time and breathing space to work their way through the backlog of cases piling up on their desks, which are only likely to increase after today’s announcement.”