Stamp Duty Holidays –Who benefits?

Stamp Duty Holidays –Who benefits?

From a search companys point of view: 

These are an absolute pain for us. They cause unnecessary peaks and troughs and distort our workflow.

Every time there is one of these, we get a bit busier than normal with 3 months to go as the media does its best to scare people into getting in early, then with about 2 / 3 weeks to go, our clients are working extremely hard on their deadline day completions and haven’t the time to process new cases.

So, while the conveyancers are working overtime to beat the deadline, we are twiddling our thumbs, hoping that there will be lots of new work after that date. Which there never is.

I would prefer the politicians would not use the housing market as toy.

So, are the holidays / deadlines worth it?

Stamp duty holidays—temporary reductions or exemptions from stamp duty on property purchases—have been used in various countries, including the UK, to stimulate housing markets. Their effectiveness depends on the goals set for them, such as boosting property transactions, supporting economic recovery, or helping buyers.

Overall Impact:

Stamp duty holidays successfully boosted market activity in the short term but contributed to price inflation and market distortions. They worked as a temporary stimulus but were not a long-term affordability solution, and it could easily be argued that the market would have been busy anyway.

The current scheme, 2025:

The 31st March 2025 changes to the stamp duty scheme could be bad news for some first-time buyers, particularly those looking to purchase properties priced between £300,000 and £425,000. Here’s why:

Why It’s a Challenge:

1. Higher Costs from April 2025 – Currently, first-time buyers pay no stamp duty on properties up to £425,000. But from April 1, 2025, the exemption limit will drop back to £300,000, meaning buyers in the £300,000–£425,000 range will have to pay 5% stamp duty on the portion above £300,000.

2. Affordability Issues – House prices have already risen significantly, partly due to previous stamp duty incentives increasing demand. The extra tax could make it even harder for first-time buyers to afford a home.

3. Potential Market Slowdown – Some buyers might rush to buy before the April 2025 deadline, but after that, demand could drop, leading to fewer properties available and sellers being less willing to negotiate.

Any Positives?

• Price Adjustments? – If demand slows after the deadline, house prices might stabilize or even fall slightly, making some homes more affordable.

• Market Cooling for Buyers – A less overheated market might mean first-time buyers face less competition and bidding wars.

Conclusion: 

Stamp duty holidays in England and Wales do increase market activity, but they also create significant peaks and troughs in the housing market.

The Peaks and Troughs Effect:

1. Deadline Rush – As a stamp duty holiday nears its end, there’s a final push to complete transactions before the deadline, creating an artificial peak.

2. Post-Holiday Slowdown – Once the tax break ends, demand drops sharply, and transaction volumes fall—sometimes dramatically. This happened in the months following the UK’s 2021 stamp duty holiday, when sales plummeted.

Overall Impact:

• Good for short-term stimulation – It gets the market moving, helps sellers, and boosts industries linked to housing (e.g., construction, conveyancing).

• Bad for long-term stability – It creates instability, making market trends harder to predict and potentially disadvantaging buyers who miss the window. 

Andrew Prismall 

Managing Director of HW Conveyancing Searches