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

The stamp duty holiday announced in July 2020 (that has since ended) played a significant role in the property market.

It led to a surge in transactions and is thought to be behind the concurrent boom in property prices. But after it ended, would those searching for a new home lose out?  

When the COVID-19 pandemic hit the UK in 2020, homeowners were worried that the property market would come to a standstill or, even worse, crash. But this was far from the reality.

Thanks to the stamp duty holiday and increased demand for more space at that time, the property market kept moving. The result is a steep increase in property prices that has continued ever since.

June 2024, for instance, saw house price growth reach 2.7%, and the average price of a UK home reached £288,000, which was £8,000 higher than the average price 12 months prior. 

The stamp duty holiday ended at the end of June 2021. Should homeowners and movers brace themselves for future slumps and a persistently competitive market?

What was the stamp duty holiday? 

The government introduced the stamp duty holiday in July 2020 to restart the property market. 

The COVID-19 pandemic put the brakes on homeowners’ plans, with many opting to postpone a move due to the uncertainty.

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 completed by 30 June 2021. 

This was ‘tapered’ from then until 30 September 2021, meaning homebuyers did not have 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 provision ended on 1 April 2021. In Wales, stamp duty was scrapped for the first £250,000, which ended on 30 June 2021.  

Did the stamp duty holiday work? 

Evidence suggests the stamp duty holiday had a positive impact on the property market.

The initial holiday (which ended in June 2021) saw 1.3 million buyers in England pay no stamp duty on the first £500,000 value of their homes, with estate agents reporting a boom in inquiries and house prices rising at their fastest rate since 2004.  

After 30 June 2021, the property market slowed down. According to tax data, completed residential transactions were down 63% in July 2021 compared to the previous month. House price growth remained at a healthy 10.5%. In 2024, it stands at a lesser but still significant 2.7%.

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

How much do I owe in stamp duty now? 

Stamp duty is currently payable on properties that cost over £125,000. 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 in 2025:

However, these are just standard rates. If you are a first-time buyer, the rules are slightly different. First-time buyers pay no stamp duty on properties up to £300,000 and pay a rate of 5% on the portion between £300,001 and £500,000. Thereafter, standard rates apply.

There is also a 5% stamp duty surcharge if you are buying an additional property, such as a buy-to-let investment or holiday home. You can find out more about how stamp duty works here. 

Who was affected by the end of the stamp duty holiday?  

The rules mainly affected people moving home rather than buying their first home, as first-time buyers would have been exempt from paying stamp duty up to a certain amount. 

If your new home increased in price faster than your current one during the stamp duty holiday, you may have felt the pinch, although it might not have been a significant one.

This was true in cases where savings were outweighed by the rise in property prices. As you’ll pay more for the property, saving on stamp duty won’t make a huge dent in your costs.

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

After the end of the stamp duty holiday, there were notable shifts in the UK property market. 

According to the BBC, people who continued their jobs during the pandemic built up large savings to contribute towards their house moves, and their preferences shifted as well, prompting them to accelerate moving plans and favour large homes with gardens.

This created additional demand not matched by supply, causing housing prices to rise considerably. These effects had and still continue to have, to a degree, an effect on buyers, and especially first-time buyers, who have found it more challenging to secure their first homes amid a highly competitive market.

Get expert financial advice

The stamp duty holiday end provided relief for the property market during and after the COVID-19 pandemic, helping to maintain a steady rate of transactions and supporting rising property prices. 

When the duty holiday ended, first-time buyers found it more challenging to buy property, but these effects are now being alleviated by a high first-time buyer stamp duty exemption threshold and slowly falling mortgage rates, driven partly by the recent reduction in the base rate.

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 an expert financial adviser or mortgage broker who can help you navigate the current housing market and secure the best possible deals.

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