In line with latest Government’s guidelines on home moving, the housing market remains open, and all our offices in England, Scotland and Wales continue to operate. Health and safety remains our main priority, and we continue to follow a number of strict measures to protect our customers and staff. More information

What will the stamp duty extension mean for the property market?

What will the stamp duty extension mean for the property market?

House price growth in the UK is nothing new ¬– but price growth in a recession has certainly taken many people by surprise.

And that’s exactly what we’ve seen since Covid-19 arrived on these shores early in 2020.

Much of the UK’s 7.5% price growth in 2020 was put down to the stamp duty ‘holiday’ and its boost to the market at a crucial time.

Now that the ‘holiday’ has been extended in England, Wales and Northern Ireland, though, what further effect will this have on the property market?

Here, we’ll look at the current and future stamp duty rules and what effect the extension of the ‘holiday’ might have…


When did the stamp duty holiday start?

The stamp duty ‘holiday’ in England and Northern Ireland was introduced on July 8, 2020, in a bid to stimulate the property market after the first coronavirus lockdown in the spring.

In Wales, Land Transaction Tax (LTT) rates were reduced on July 25, 2020, while Scotland followed suit with Land and Buildings Transaction Tax (LBTT) on July 15.


When will the stamp duty holiday end?

The stamp duty ‘holidays’ in England, Northern Ireland, Scotland and Wales were originally due to end on March 31, 2021.

However, England, Northern Ireland and Wales have all now extended their stamp duty savings until June 30, 2021, with England and Northern Ireland offering a tapered additional extension until September 30, 2021.

Scotland, however, opted not to extend its own stamp duty ‘holiday’ and this came to an end as planned on March 31, 2021.


Current stamp duty rates

Stamp duty is a devolved issue, meaning each country of the UK makes its own rules when it comes to the property tax – although England and Northern Ireland have the same rules.


Current stamp duty rates in England and Northern Ireland

The stamp duty ‘holiday’ in England and Northern Ireland means buyers pay no tax on the first £500,000 of a property’s purchase price until June 30, 2021.


Current LTT rates in Wales

In Wales, buyers currently pay no Land Transaction Tax (LTT) on the first £250,000 of a property’s purchase price and this is in place until June 30, 2021.


Current LBTT rates in Scotland

The ‘holiday’ on Land and Buildings Transaction Tax (LBTT) in Scotland came to an end on March 31, 2021.

That means buyers north of the border now pay no LBTT on the first £145,000 of a property’s purchase price.

Under the LBTT ‘holiday’, buyers were exempt from tax on the first £250,000.


How are stamp duty rates changing in 2021?

The Scottish Land and Buildings Transaction Tax (LBTT) ‘holiday’ ended on March 31, 2021 and buyers there are now exempt from tax on the first £145,000 of a property’s purchase price.


Stamp duty changes in England and Northern Ireland

From July 1, 2021 until September 30, 2021, buyers in England and Northern Ireland will be exempt from stamp duty on the first £250,000 of a property’s purchase price, while first-time buyers will pay no tax on the first £300,000 of properties costing up to £500,000.

Then, from October 1, 2021, the exemption threshold will drop from £250,000 to £125,000, although first-timers will still be exempt from tax on the first £300,000 of their purchase price up to a maximum of £500,000.

First-time buyers purchasing homes costing more than £500,000 will pay the standard rates of stamp duty from July 1.

Find out more about stamp duty rates in England and Northern Ireland from October 1 here.


Stamp duty changes in Wales

In Wales, buyers will be exempt from Land Transaction Tax (LTT) on the first £180,000 of a property’s purchase price from July 1, 2021.


How will the stamp duty extension affect the property market?

There’s no doubt that the stamp duty ‘holidays’ introduced in the summer of 2020 had a huge effect on a UK property market that was effectively completely shut down during the spring. After the property market reopened in May 2020, pent-up demand from buyers and sellers meant that:

• Annual property prices rose by 3.7% in July – the largest increase since 2016

• The number of sales agreed in August was the highest monthly figure for 10 years

• Annual prices rose to 5.5% in October and had reached 7.3% by December, according to Nationwide’s end of year figures


After the extension to stamp duty savings in England and Northern Ireland was announced early in March, Rightmove reported the strongest seller’s market for 10 years – with buyer enquiries 34% higher than at the same time in 2020.

The portal also reported that two of every three properties on the market were ‘sale agreed’ – meaning a shortage of options for eager buyers.

However, more sellers are now coming to market:

• The number of sales agreed on March 23, 2021 was the highest single daily figure for 10 years

• A record 9.1million property hunters visited Rightmove on March 24 alone

• New listings on Rightmove were up 17% in March compared with February and 28% higher than January

Spring and early summer looks set to be one of the busiest in years as buyers look to secure the stamp duty savings on offer.

And with the number of properties up for sale still failing to meet buyer demand, if you are thinking of selling, now is definitely the time.


Common stamp duty questions answered


1. Can stamp duty be paid in instalments?

Stamp duty must be paid in full within 30 days of you completing your property purchase and cannot be paid in instalments.


2. Can stamp duty be refunded?

While stamp duty refunds are uncommon, there are certain circumstances where you may be eligible for a refund:

Some second home buyers

If you buy a second home and pay the 3% additional property surcharge, but sell your original home within three years, you may be owed a stamp duty refund.

Buildings with an annexe

If you purchased a property with an annexe, or ‘granny flat’, you may have paid the 3% additional property surcharge because the main property and the annexe were previously regarded as two separate homes.

The rules on this changed in 2018 and annexes are now regarded as the same property in certain circumstances.

If you paid the surcharge, you may be entitled to a refund.


Further reading…

First-time buyers will be exempt from stamp duty on the first £300,000 of a property’s purchase price from July 1, 2021 – and a Help to Buy equity loan could be a further option to help you get on the property ladder.

We’ve rounded up everything you need to know about Help to Buy equity loans in our helpful guide.