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9 Jun 2021

Buying a house: is there still time to benefit from the stamp duty holiday?

Buyers in England and Northern Ireland can make savings until 30 September

The stamp duty holiday has sent the property market into overdrive, with house prices and sale figures soaring, but is it too late to make a big saving when buying a home?

The current tax break is set to wind down from 1 July, but buyers in England and Northern Ireland will still be able to make stamp duty savings right up until the end of September.

Here, Which? explains how stamp duty rates will change from next month, and offers advice on whether now is a good time to buy a home.

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What is the stamp duty holiday?

Last July, the government temporarily introduced higher stamp duty thresholds in a bid to get the property market moving after the first Covid-19 lockdown.

The changes enabled buyers in England and Northern Ireland to benefit from a £500,000 tax-free threshold, up from £125,000 for existing homeowners or £300,000 for first-time buyers.

In practice, this meant that a home mover buying a property for £500,000 or more would save £15,000 on the usual stamp duty bill.

In Wales, the standard threshold of £180,000 was increased to £250,000, and in Scotland the threshold of £145,000 (or £175,000 for first-time buyers) was increased to £250,000.

When does the stamp duty holiday end?

The stamp duty holiday ended on 31 March in Scotland, and Wales will follow suit on 30 June.

In England and Northern Ireland, the tax break will be tapered rather than ending completely.

On 1 July, the temporary £500,000 threshold will be cut to £250,000 until 30 September, after which the usual thresholds will be reinstated.

This means buyers in England and Northern Ireland will still have the chance to make savings if they buy a home before the start of October.

How much will I save if I buy before 30 September?

Unless you're currently in the process of exchanging contracts, it will be near-impossible to get a house purchase over the line before the end of June and benefit from the biggest savings.

You may, however, have a chance of completing before the end of September.

The reduced £250,000 threshold between July and September offers savings of up to £2,500 for home movers.

The table below shows how much you'll need to pay in stamp duty when buying a home in England or Northern Ireland.

Property priceUp to 30 June (£500,000 threshold)1 July to 30 September (£250,000 threshold)1 October onwards (£125,000 threshold)

Use our stamp duty calculator

If you're considering buying a home and want to know how much you'll need to pay in tax, you can use our stamp duty calculator below.

How will the changes affect first-time buyers?

First-time buyers in England and Northern Ireland won't make any tax savings once the threshold is reduced to £250,000 on 1 July.

That's because people buying their first home already benefit from a stamp duty threshold of £300,000, which was introduced in 2017.

This allowance means most first-time buyers already don't pay any stamp duty, unless they're buying homes in more expensive areas.

Data from the Land Registry shows first-time buyers in England pay an average of £228,000, well below the £300,000 tax threshold.

How has the stamp duty holiday affected the market?

The stamp duty break has had a significant effect on house prices and the number of homes being sold.

Land Registry data shows house prices rose by 10% year-on-year in March to reach an average of £256,000.

Sale numbers also spiked, with figures from HM Revenue & Customs showing 118,000 people moved home this April.

Research by the estate agent comparison website GetAgent found that by the time the break ends, over half a million homebuyers in England will have benefited from the stamp duty cut.

Its projections show that 76% of buyers will have avoided paying any stamp duty during the holiday, with total savings hitting £3.4bn.

Do high house prices counteract the savings?

The tax cut has been a welcome development for people looking to cut the additional costs of buying a home, but it has served to push up demand.

The combination of the tax cut and changing buyer priorities since the start of the pandemic has caused a perfect storm in the property market, resulting in soaring house prices.

If you're considering buying a home now, you'll need to think carefully about whether it makes sense to take the leap during a time when the market is on fire, as while you might save on tax, you could end up overpaying for the property itself.

In the short term, overpaying would leave you vulnerable if prices fall after the stamp duty holiday ends, so before making that big purchase, consider whether now is the right time and whether you're making the move for the long term.

Mainstreet and houses in Eastbourne, Sussex, Unite

When will it be too late to make a saving?

There's just over three-and-a-half months left to make a stamp duty saving when buying a property in England or Northern Ireland.

This might seem like plenty of time to get your purchase completed, but there are currently significant delays in the home buying process.

Property portal Rightmove says more than 700,000 house purchases are currently in the works, and delays are likely.

Earlier this week, The Law Society spoke of 'stressed and under-pressure solicitors working late into the night and over weekends, with little or no work-life balance, to ensure their clients' transactions are able to complete according to their wishes.'

This rush comes ahead of the £500,000 threshold being lowered at the end of the month, and won't necessarily scupper your chances of buying a home before the end of September.

That said, it's important to be realistic and manage your expectations over how quickly you'll be able to move.

The Which? Money Podcast: is now the time to get a mortgage?

On a brighter note, homebuyers looking to get a cheap mortgage deal when moving up the property ladder may be in luck.

Mortgages rates are very attractive at the moment, with rates below 1% now available for buyers with big deposits.

On last week's Which? Money Podcast, we discussed the latest developments in the mortgage market, including whether now is the time to lock in a deal and the options currently available to first-time buyers.

You can listen to the full episode below.