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Stamp duty holiday end: what was it and what effect did it have?

The stamp duty holiday has been a saviour for the property market. It has led to a surge in transactions and is thought to be behind the recent boom in property prices. But now that it’s coming to a close, will those on the hunt for a new home lose out?  

When Covid-19 hit the UK, homeowners were worried that the property market would come to a standstill, or even worse, crash. But this has been far from the reality. Thanks to the stamp duty holiday and increased demand for more space and access to the great outdoors, the property market has kept moving, and fast. The result is a steep increase in property prices. June, for instance, saw house price growth reach 13.4% – its highest for 17 years. 

But now that the stamp duty holiday has closed, should homeowners and movers brace themselves for a slump?  

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What was the stamp duty holiday? 

The government introduced the stamp duty holiday in July 2020 as a way to restart the property market. Covid-19 had put the brakes on homeowners’ plans, with many opting to postpone a move while the situation was uncertain. In response and as an incentive for people to move home, the government removed stamp duty on the first £500,000 of a property for transactions that completed by 30 June 2021. This has been ‘tapered’ from then until 30 September 2021, meaning homebuyers haven’t had to pay stamp duty on the first £250,000, saving up to £2,500. 

The rules were similar in Scotland, where stamp duty wasn’t owed on the first £250,000, but this ended on 1 April 2021. And in Wales, stamp duty was again scrapped for the first £250,000, which ended on 30 June 2021. 

Did the stamp duty holiday work? 

Evidence suggests the stamp duty holiday made a positive impact on the property market. The initial holiday (which ended in June) saw 1.3 million buyers in England pay no stamp duty on the first £500,000, with estate agents reporting a boom in enquiries and house prices rising at their fastest rate since 2004.  

After 30 June 2021, the property market did slow down. According to tax data, completed residential transactions were down 63% in July compared to the previous month. Having said that, house price growth remained at a healthy 10.5%.  

The ending of the initial stamp duty holiday doesn’t appear to have knocked the property market, but will this remain the case now all stamp duty holiday rules have ended? 

How much do I owe in stamp duty now? 

From 30 September 2021, stamp duty is reverting to its previous rules. You’ll start paying stamp duty on anything over £125,000 of the agreed sale price. It’s a tiered system, meaning you don’t pay the full rate on the entire property price, just the amount that dips into each tier. Here’s a snapshot of the different brackets: 

Property price 

Stamp duty percentage 

£0 to £125,000 


£125,001 to £250,000 


£250,001 to £925,000 


£925,001 to £1,500,000 




You can find out more about how stamp duty works here

Who will the end of the stamp duty holiday affect?  

The new rules mainly affect people moving home, rather than buying their first home. That’s because first-time buyers are exempt from paying stamp duty if the property price is less than £500,000 (which will be the case for most).  

For home movers, however, the original rules will apply. That means no more savings on stamp duty, coupled with the current increase in house prices. If your new home has increased in price much faster than your current home has, you’re likely to feel the pinch. But given that the stamp duty saving between June to September was much smaller – down to a maximum of £2,500 compared to a maximum of £15,000 – many will hardly notice the difference. This is especially true in cases where savings have been outweighed by the rise in the property price. Because you’ll be paying more for the property, the saving on stamp duty won’t make a huge dent in your costs.  

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How will the new stamp duty rules affect the property market? 

Although property transactions have slowed down, estate agents report that the 30 September wasn’t a pressing issue for homebuyers. And we still don’t know how the end of the stamp duty holiday will affect property prices. If demand for property remains strong, the likelihood is that prices will continue to grow, but perhaps at a slower rate. Having said that, there is also the chance that they will stagnate or even fall. 

Is now still a good time to move? 

The stamp duty holiday wasn’t the only driver behind the booming property market we’ve seen in recent months. It has also been an attractive time to take out a new mortgage. Rates have been at rock bottom for several months, meaning people have been able to take out a relatively cheap loan.  

Lenders have also upped their game, approving mortgages much faster than pre-pandemic levels. Some banks, including Virgin Money and Clydesdale Bank, even offered borrowers £100 if they didn’t receive an offer within 10 days of submitting their full application. Approval times do vary by region though. In the North East, for instance, approval takes an average of seven days, while in the South West, approval takes an average of 20 days.  

Another boost for the property market has been more relaxed lending criteria. In light of furlough and heavily impacted work commitments, lenders appear to be more open to accepting self-employed borrowers and taking pay like bonuses and commission into account.  

All of these trends, along with changing attitudes to what people what from their living situation (e.g. more space and access to the outdoors), mean that moving house is still appealing. If you want to make the most of the low mortgage rates and more relaxed lending criteria, now is the ideal time to speak to a mortgage broker to find a good deal. 

Are other tax rates increasing? 

Yes – both council tax and national insurance contributions are going up. In the 2021/22 tax year, most councils increased their rates, many of which went above the 5% maximum recommended by the government. In Wrexham, for example, the rate went up by 6.43%, which is similar to the 6.03% rise seen in the East Riding of Yorkshire. But this isn’t the case everywhere. Scotland has frozen council tax rates for this tax year, while some places have only increased the rate slightly, like Warwick, which opted for a 0.74% rise. 

National insurance will increase by 1.25% from April 2022 for people in England. This additional amount is a Health and Social Care levy, to help these essential services recover after the pandemic. The levy may affect your monthly income and mortgage affordability, so do speak to an IFA if you’re concerned. 

Whether you are looking to move home or would like a clearer idea of how tax changes will impact you, let us match you to your perfect financial adviser. Look for a mortgage broker if you’re searching for a great deal or speak to an IFA for help arranging your finances.  

If you found this article helpful, you might also find our article about paying stamp duty on shares informative, too.

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About the author
Kate has written for leading publications and blue chip companies over the last 20 years.