There has been great pressure on Chancellor of the Exchequer Rishi Sunak to extend the Stamp Duty holiday past its cut-off date of March 31^st next year.

But he has resisted; holidays never last forever! The report issued when he delivered his Spending Review in November shows the existing Stamp Duty regime is estimated to cost the Exchequer £2.295 billion in lost revenue this financial year and a further £1.04 billion in the year 2021-22.

As with all incentives, there has to be a cut-off date or what was intended to be a market stimulus instead becomes, for want of a better phrase in these strange times, the new normal. However, there’s always a silver lining to every cloud and in this case it’s news that first time buyers will now pay no Stamp Duty on purchases up to £300,000 (it was previously £250,000) and will get a follow-on reduction in the tax amount on purchases up to £500,000. They will also be supported by a further two years of the Help to Buy scheme.

Incentives that are regularised quickly lose their gloss and it’s also fair to argue that, having made the post-lockdown market red hot in the summer, the Stamp Duty tax removal on residential property transactions up to £500,000 (and a reduction for properties beyond that cut-off) also led to a rise in prices that went some way to negating its effect.

As a result, the winners were sellers rather than buyers, who instead of paying the tax to the exchequer handed it to the person they bought from. The cost to the buyer remained the same – the loser was the Government which is, in effect, all the rest of us.

It’s important that developers don’t follow this example and use the new higher cut-off for first time buyers as an excuse to raise prices. The whole market depends on new buyers coming in at the bottom so first timers are the most important people in any transaction chain.

Bear in mind that a tax incentive is not the basis to drive such a substantial transaction as buying a house. What must be the decider is whether or not the house itself suits your needs (as distinct from desires), whether it is in the right place, and whether or not you can afford it. Saving a few thousand on the purchase price by avoiding Stamp Duty would not be the right reason and, as we have seen, the hot market soon saw that “saving” absorbed into the prices achieved by homes across the nation.

So come April 1^st next year who will be the fools? Will it be those who don’t buy because they don’t get a notional tax saving or those who shrug their shoulders, admit that the house is where they need to live, and get on with the purchase regardless? I would suggest the former are the idiots, the latter the sensibly informed.

Fortune, they say, favours the brave. So come April 1^st with no Stamp Duty holiday join the brave. You won’t regret it!

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