After 14 hectic months, stamp duty holidays in England and Northern Ireland are coming to an end today.

The government’s tax break weighed on the property market and buyers tried to save up to £ 15,000 on home purchases.

Here which one? explains what the real estate market looks like after the tax break has expired and offers advice on whether now is a good time to buy a home.

The stamp duty leave is coming to an end

In July 2020, the government introduced a temporary stamp duty vacation to get the property market going again after the first Covid-19 lockdown.

The holiday included a temporary increase in the thresholds above which stamp duty must be paid across the UK.

The homebuyer exemption increased from £ 125,000 to £ 500,000 in England and Northern Ireland, from £ 145,000 to £ 250,000 in Scotland and from £ 180,000 to £ 250,000 in Wales.

This meant that people buying property in England or Northern Ireland could save up to £ 15,000 on their usual bill.

The tax break ended on March 31 in Scotland and June 30 in Wales. It has been slimmed down in England and Northern Ireland, where the temporary tax-free allowance was reduced from £ 500,000 to £ 250,000 from July 1st to September 30th, resulting in a lower maximum savings of £ 2,500.

As of today, tax breaks across the UK have ended and thresholds have returned to pre-pandemic levels.

How the stamp tax cut affected property prices

The stamp duty holiday had a seismic effect on the UK property market as house prices rose significantly across the board.

The table below shows how prices have developed since June 2020 (the month before the stamp duty break) and July 2021 (the last month for which land register data is available). No corresponding data are available for Northern Ireland.

country Average house price (June 2020) Average house price (July 2021) Percentage change
England € 252,432 € 270,973 7.3%
Scotland £ 157,191 € 177,166 12.7%
Wales € 168,009 £ 187,960 11.9%

What happened to property sales?

The promise of a lower tax burden has resulted in a huge surge in homebuyers competing to secure homes. In England, the greatest competition came in more expensive markets as buyers sought to save up to £ 15,000 in taxes on property for more than £ 500,000.

This increased demand resulted in homes falling below supply much faster, but as a result the buying process slowed as real estate agents, hauliers and home surveyors came under unprecedented pressure.

In June, the month that saw the end of the biggest stamp duty savings, 198,000 homes were sold in the UK, twice as many as a normal month.

However, there are signs that the onslaught has now subsided. In August UK home sales had dropped to just under 100,000.

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UK stamp duty rates

Stamp duty rates have now returned to their old levels across the UK. How much you pay depends on where you are buying a home and whether you are a first time home owner, an existing homeowner, or an investor.

England and Northern Ireland

Existing homeowners have a tax exempt threshold of £ 125,000. First time buyers can benefit from a higher threshold of £ 300,000 as long as the property they are buying costs £ 500,000 or less.

Buyers of rental properties or second homes must pay a 3% surcharge on the prices listed below. Buyers from abroad have to pay a surcharge of 5%.

Existing homeowners

Share of the property price: Percentage to be paid
£ 0 to £ 125,000 0%
£ 125,001- £ 250,000 2%
£ 250,001- £ 925,000 5%
£ 925,001- £ 1.5m 10%
£ 1.5m + 12%


First time buyers (homes priced below £ 500,000)

Share of the property price: Percentage to be paid
€ 0 to € 300,000 0%
£ 300,001- £ 925,000 5%
£ 925,001- £ 1.5m 10%
£ 1.5m + 12%

Scotland

The stamp duty in Scotland is called the Land and Buildings Transaction Tax (LBTT). First-time buyers benefit from a slightly higher LBTT threshold than existing homeowners.

People buying real estate or second homes must pay 4% extra on top of the prices listed below.

Existing homeowners

Share in the property price Percentage to be paid
€ 0 to € 145,000 0%
£ 145,001- £ 250,000 2%
£ 250,001- £ 325,000 5%
£ 325,001- £ 750,000 10%
£ 750,000 + 12%


First time buyer

Share in the property price Percentage to be paid
£ 0 to £ 175,000 0%
£ 175,001- £ 250,000 2%
£ 250,001- £ 325,000 5%
£ 325,001- £ 750,000 10%
£ 750.00 + 12%

Wales

The stamp duty in Wales is known as Land Transaction Tax (LTT). Unlike the rest of the UK, the same thresholds apply to existing homeowners and first time buyers.

Individuals buying investment property or second homes are required to pay a 4% surcharge in addition to the tariffs listed below.

Share in the property price Percentage to be paid
€ 0 to € 180,000 0%
£ 180,001- £ 250,000 3.5%
£ 250,001 – £ 400,000 5%
£ 400,001- £ 750,000 7.5%
£ 750,001- £ 1.5m 10%
£ 1.5m + 12%

Stamp tax calculator: how much do I pay?

If you are thinking of buying a home, our stamp tax calculator below can help you find out how much stamp tax you will have to pay.

Is Now a Good Time to Buy a Property?

With the stamp duty holidays over, house price growth is likely to slow down – but don’t expect prices to fall anytime soon.

Real estate agencies Savills and Hamptons predict prices will rise 3.5% in 2022, with both brokers saying they expect slower growth than we’ve seen this year.

With some uncertainties about Covid-19, inflation and the Bank of England rate, we could still see some volatility in the market. So if you’re looking to buy, you may need to be prepared to weather all the twists and turns.

House prices are high right now, but there is a breathing space for buyers in the form of low mortgage rates.

Buyers with larger deposits can now benefit from the lowest prices ever. Elsewhere, the market for first-time buyers is improving as rates on low-deposit mortgages have fallen significantly this year.