The stamp duty (SDLT) holiday introduced in September 2022 came to an end on 31st March this year and the latest provisional transaction numbers published by HM Revenue & Customs (HMRC) confirm that buyers rushed to complete their home purchases in time. Our research shows that March saw the largest increase in transactions prior to the end of any stamp duty holiday since at least 2009.
As a recap, during the SDLT holiday the nil-rate threshold was doubled to £250,000. For first-time buyers, the threshold was increased from £300,000 to £425,000 and the standard SDLT charge was applied to properties worth more than £625,000, up from £500,000.
In March, the final month of the holiday, monthly property transactions increased by 68% compared to the three months prior – rising from 96,080 home sales above £40,000 to 161,500.
While previous stamp duty holidays saw a larger number of actual transactions in the final month, there wasn’t such a striking increase in percentage terms as the deadline neared. For example, in March 2016, just before the 3% SDLT surcharge on second home purchases was introduced, there were 168,060 property transactions, a 51% uplift compared to the three months prior.
And in June 2021, when the Covid SDLT holiday that saw no tax payable on the first £500,000 of a property was about to end, there were 210,640 property transactions, a 23% increase compared to the three months prior.
However, our analysis shows that the larger the uplift in transactions prior to stamp duty changes, the larger the hangover in subsequent months tends to be. For instance, transaction numbers fell by 40% in the three months after the 3% SDLT surcharge was implemented in 2016.
In many cases, this is because transactions which would have taken place in later months are brought forward as buyers look to secure savings. While we expect significantly fewer homes to complete in April, we think the hangover from the end of the stamp duty holiday will be modest by historical standards. After dipping slightly after the holiday came to an end, the number of homes coming onto the market and the number of sales being agreed have returned to above last year’s levels in recent weeks.
However, there are signs that some sellers have been more willing to cut their asking price now that the stamp duty holiday is over. In April, almost half (48%) of homes sold had undergone a price cut, up from 45% in January, February and March this year. This takes the levels of price reductions, which had dropped towards the end of 2024 as mortgage rates declined, back towards the levels seen last summer.
The biggest increase in price reductions is being seen on homes in the Midlands and the North of England, where more buyers are being dragged into paying SDLT. In the Midlands, where 88% of homes now sell above the SDLT nil-rate tax band, up from 34% during the SDLT holiday, the share of homes sold following a price reduction increased from 42% in March to 50% in April.
Meanwhile, price reductions in London have become less common, with the share of homes sold following a cut dropping by 1% in April to 46%. In the capital, the maximum £2,500 increase in a mover’s SDLT bill makes up a lower proportion of their overall purchase price, so buyers are likely to be a bit less sensitive to the change.
Indeed, when we segment the numbers by price band, we can see that lower and mid-value homes are now coming under the most pressure. In April, 48% of homes sold under £250,000 changed hands following a price reduction, up from 43% the previous month and the highest figure since December 2024.
Historically, more expensive homes have been much more likely to have needed a price reduction in order to sell. However, in April, homes sold under £250,000 were equally as likely to have sold following a price reduction as those sold over £250,000 – the first time this has happened since January 2015.
Despite more homes selling after a price reduction, vendors are now achieving closer to their asking price than they were previously. In April, the average discount secured on a home that sold following a reduction fell to £1,250 – from £2,000 in February and March.
First-time buyers, who are more likely to face an increase in their tax bills, are failing to negotiate further discounts. In most cases, however, lower mortgage rates have helped to offset higher stamp duty bills. And it’s these affordability improvements that we expect will provide a boost to the market in the months ahead, underpinning both prices and the number of sales taking place.
