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Did the Stamp Duty Holiday Ignite a BTL Fever?

Despite the reduction in stamp duty bills, there is little sign that the stamp duty holiday led to large numbers of new investors purchasing buy-to-lets.

At their peak this year, investors purchased 14 per cent of homes sold across Great Britain in February, the month before the original end of the stamp duty holiday.  However, over the entire course of the 15-month tax-break investors purchased 12 per cent of homes sold in Great Britain. This is marginally up from an average of 11 per cent during the 12 months before the holiday, but far from the 17 per cent recorded in Q4 2015 – the run up to the introduction of the 3 per cent stamp duty surcharge on 1 April 2016.

This means there were a total of 215,000 investor purchases across Great Britain between July 2020 and September 2021.  While this figure is up from 164,300 during the equivalent period in 2018 and 2019, more transactions have taken place by other buyer types.  Both these numbers remain below the 242,400 purchases which were made during the 15-month run up to the introduction of the 3 per cent stamp duty surcharge on 1 April 2016.

Over the course of the15-month stamp duty holiday, the average buy-to-let investor’s tax bill fell by 35 per cent – from £8,500 in the month before the holiday, to an average of £5,500 between July 2020 and September 2021.  For the average investor, this equates to almost three months’ rent.

The average bill came to £5,300 during the first 12 months of the holiday when investors paid the 3 per cent stamp duty surcharge on the first £500,000 of any purchase.  It then rose 17 per cent to £6,200 when the threshold fell to £250,000 between July and September 2021.  Average bills are set to return to around £8,400 from 1 October 2021, just below what investors were paying on the eve of the stamp duty holiday.

Overall, the holiday meant that the average investor paid less in stamp duty than at any time since April 2016, when the 3 per cent stamp duty surcharge was introduced.  Despite this, the average bill during the holiday remained twice the level it was before the surcharge was introduced.  This is partly why there hasn’t been as much of an increase in investor purchases this time around.

There is little indication that investors used their savings from the holiday to buy bigger properties in more expensive areas.  Instead, 83 per cent of investor purchases were under £250,000, meaning their savings from the holiday were significantly smaller than those enjoyed by home movers.  It also means that investors have been less sensitive to the change in the nil-rate stamp duty threshold since they tend to buy cheaper properties.

During the holiday the average price paid by a landlord rose by just 1 per cent to £181,000, despite house price growth of 10 per cent over the same period.  This suggests landlords were happy to pocket the tax saving rather than use it to buy a property which would generate more rent.


Average rental growth across Great Britain hit 8.0 per cent in September, the third fastest annual rate of growth recorded this year.  Nationally, regions in the South of England have continued to drive rental growth.  The average rent on a new home rose 14.8 per cent in the South West, 14.7 per cent in the South East and 10.8 per cent in the East of England. September marked the sixth consecutive month where annual rental growth hit double figures in the South West.

London rents have also continued to recover.  Although Inner London rents fell for the twentieth consecutive month, the 4.4 per cent annual fall was the smallest decline this year, and smaller than the 22.1 per cent decrease recorded in April when the market bottomed out.  In Outer London, rents grew 3.2 per cent annually in September, rising for the thirteenth consecutive month.  This kept Greater London rents overall in positive territory, up 1.8 per cent year-on-year.