The Aftermath of the SDLT Holiday for the Residential Property Market

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The recent Stamp Duty Land Tax (SDLT) holiday ended on 30 June 2021, with a tapered decrease in the threshold below which no Stamp Duty needs to be paid on property purchases.

On 8 July 2020, the Chancellor of the Exchequer announced a temporary increase in the amount purchasers could pay when buying a property without incurring Stamp Duty. This set the level above which Stamp Duty must be paid at £500,000 up from the previous threshold of £125,000. This Stamp Duty holiday was originally set to last from 8 July 2020 to 31 March 2021, before later being extended to 30 June 2021.

Under the terms of the Stamp Duty holiday extension, announced on 3 March 2021, there will be an interim period from 1 July 2021 to 30 September 2021 where the Stamp Duty threshold will decrease to £250,000. Then from 1 October 2021, the SDLT threshold will return to the pre-pandemic level of £125,000, meaning buyers will need to pay Stamp Duty on properties sold for more than £125,000.

Stamp Duty rates explained

A key point to understand is that the SDLT threshold means that you do not pay Stamp Duty on a property worth less than this and if a property is worth more than the threshold, you only pay Stamp Duty on the value of the property above this threshold.

It is important to note that Stamp Duty rules are different for first time buyers, second properties and commercial purchases. All SDLT rates are explained here at

How will the end of the SDLT holiday affect house prices and lending?

While there is no certainty over exactly what we can expect to see from the housing market as the SDLT threshold reduces and eventually returns to normal, there are indicators we can look at to make some predictions

FT Adviser reports that there was a slowdown in mortgage borrowing and property transactions in April, the month after the Stamp Duty holiday was originally set to end.

Mortgage borrowing saw a very sharp fall, with net borrowing in April standing at £3.3 billion, compared to a record £11.5 billion in March and a monthly average for £5.7 billion in the previous 6 months to February 2021.

Meanwhile, HMRC figures show that the number of house sales dropped to around 111,260 in April, down from 173,410 in March.

This may suggest that people were rushing to complete their sales in March with the expectation that the Stamp Duty holiday would be ending and that fewer sales were scheduled to complete in April as people were expecting to have to have to pay higher Stamp Duty then.

This could mean that we see a fall in transactions in July as the SDLT threshold decreases, followed by a surge in people aiming to complete their transactions before the end of the Stamp Duty holiday in September, with a fall in transactions in the following month.

Property values are continuing to rise, however, with average house prices going up in April. Nationwide’s House Price Index shows prices up 2.1% from March for an average of £238,831. Overall, the latest office figures show that property values are 10.2% higher at the start of June 2021 than they were a year earlier.

Robert Gardner, Nationwide’s chief economist, told the BBC that there is a “race for space” with many people keen to buy properties with a garden or outdoor space. He also suggested that “the majority of people are looking to move to less urban areas”.

Mr Gardner said: “It is shifting housing preferences which is continuing to drive activity, with people reassessing their needs in the wake of the pandemic”.

He also credited the Stamp Duty holiday extension with helping to maintain momentum in the property market.

It is hard to predict exactly what impact the end of the Stamp Duty holiday will have on house prices. It may be that the rush of people aiming to buy during the SDLT holiday has inflated property prices and therefore there may be a slowdown in price rises or even a slight fall from October.

However, the race for space is unlikely to end soon. It now looks likely that many people will continue to work from home at least some of the time even once all social distancing measures are removed.

According to Kate Lister, President of Global Workplace Analytics: “Our best estimate is that 25-30% of the workforce will be working-from-home multiple days a week by the end of 2021.” This means there will likely continue to be demand for properties with spare bedrooms and other suitable space for home working.

It is also probable that people will look further afield, in less urban areas, if they are not having to commute regularly to workplaces in town and city centres.

This means there is every reason to believe that there will still be significant increased demand for the right properties in the right location, even once the Stamp Duty holiday ends. And with increased demand comes increased prices, so it is a relatively safe assumption that property prices will continue to rise for the foreseeable future.

Longmores’ view on how the end of the SDLT holiday will affect the UK property market

With the end of the Stamp Duty holiday and tapered Stamp Duty relief looming, our residential conveyancing team has seen a surge of new instructions from people looking to complete their transactions before they will be liable for SDLT.

We are anticipating a slowdown in the market in July and possibly into August with the Stamp Duty threshold decrease, but all the signs point to demand from homebuyers exceeding supply. We would expect this to result in property prices rising which may well incentivise more people to put their properties on the market.

As a result, while it is unlikely that activity will be at the level of the last 6 months, we expect to see high levels of property sales and purchases continuing in spite of the SDLT threshold deceasing in July and the Stamp Duty holiday ending in September.

Speak to our Residential Property team for expert advice on buying or selling your home

Whether you are buying or selling your home, you will make life much easier for yourself if you work with a team of experienced conveyancing experts.

A good conveyancing solicitor will be able to ensure all the right details are taken care of, that all paperwork is filled out accurately and promptly and that any potential problems are anticipated and dealt with effectively. This not only helps your transaction to go ahead faster and more smoothly, it makes sure that you are protected against the possibility of anything going wrong.

At Longmores, our Residential Conveyancing team have decades of combined experience guiding homebuyers and sellers through all manner of residential property transactions. We offer a friendly, efficient service that you can rely on, with accreditation from the Law Society’s Conveyancing Quality Scheme (CQS) providing assurance of our high standards.

To discuss a property sale or purchase, or any other residential property matter, with our highly experienced residential conveyancing solicitors, please get in touch.