Chancellor Rishi Sunak is under pressure to extend the stamp duty holiday to prevent buyers being caught in a “completion trap”.
Around 88pc of home purchases in England and Northern Ireland are currently tax-free after the Chancellor raised the nil-rate tax band from £125,000 to £500,000 in July.
Sales have since boomed, but there are clear signs the market is on an increasingly shaky footing and will not be able to withstand the removal of the incentive.
So is the stamp duty holiday being extended?
The Chancellor is expected to announce a three-month extension to the stamp duty holiday during the Budget on March 3.
He is reportedly preparing to keep the holiday running until the end of June, three months beyond the original March 31 deadline.
Why is it being extended?
Fears are mounting that hundreds of thousands of consumers will be left with surprise tax bills as extreme delays in the home-buying system mean they cannot complete in time for the March deadline.
Hamptons data shows that 34pc of sales agreed in January 2020 were completed by March 31. But this year there are nearly twice as many sales in the pipeline and the conveyancing process now takes five months instead of the three that is typical in normal times.
Andrew Boast, of SAM Conveyancing, has a client who has 10 weeks to complete in time to save £12,500 in tax, but the wait time for their local authority search runs until April.
He said: “Either the transaction will fall through or the buyer will negotiate a discount as close to the missed stamp duty saving as possible.”
If the holiday is not extended, 100,000 buyers who agreed a purchase last year will lose out on the tax savings, according to Rightmove, the property website.