Home sales surged by nearly 50% in February as end of stamp duty holiday loomed

The number of home sales recorded in February surged by nearly 50% compared with a year earlier as people rushed to beat a stamp duty holiday deadline which has since been extended, HM Revenue and Customs (HMRC) figures indicate.

Some 147,050 transactions took place in February 2021, marking a 48.5% increase compared with 99,000 transactions recorded in February 2020, the provisional figures showed.

The February 2021 total was also a 23% month-on-month increase.

A stamp duty holiday, which applies in England and Northern Ireland, had been due to end on March 31, but in the March 3 Budget the holiday was extended in its current form, with the “nil rate” threshold at £500,000, until June 30.

There will then be a “tapered” holiday until September 30, when the “nil rate” band will reduce to £250,000. From October 1, it will revert to the normal level of £125,000.

In Wales, a temporary increase in the nil rate band of the residential land transaction tax (LTT), the equivalent of stamp duty, will remain in place until June 30.

In Scotland, a temporary increase in the nil rate band of the residential land and buildings transaction tax (LBTT) will end on March 31.

HMRC said the latest figures are likely to reflect taxpayers trying to file returns for completed transactions in time for the original stamp duty holiday deadline, before it was extended in the Budget.

It cautioned its estimates for the latest month are based upon incomplete data and so the latest figures may need to be revised in future.

Between April 2020 and February 2021, a total of 1,013,730 home sales were recorded, which was only slightly down compared with 1,077,540 recorded in the same period a year earlier, despite the impact of the coronavirus pandemic.

Lucian Cook, head of residential research at estate agent Savills, said: “This strong surge in transactions is underpinned by underlying demand from people looking for more space given their experience of living, working and schooling from home.

“It’s also a salutary reminder of how pre-announced stamp duty measures can distort market behaviour, reflecting people’s overwhelming desire to beat the end of the stamp duty holiday that, though since extended, was scheduled for March 31.

“There is growing evidence that the extension of the stamp duty holiday, together with the rollout of the vaccine and progressive easing of social distancing, is likely to support continued strong activity over coming months and potentially into the autumn market.

“With that in mind we expect to see around 1.4 million housing transactions this year, some way ahead of the post-credit crunch norm of 1.2 million.”

Sam Mitchell, CEO of online estate agent Strike, said: “Last month the race was on to exchange and compete ahead of the supposed stamp duty holiday deadline in March.

“That kept property transaction levels high, but with it now being extended, things are about to go full throttle.”

He added: “The rush in February amongst buyers and sellers to benefit from the stamp duty holiday will likely be seen all over again three months down the line – but a smoother transition back to normal rates at the end of September will at least help to ease that for some.”

Tomer Aboody, director of property lender MT Finance, said: “With the extension of the stamp duty break, further buyers have decided that now is the time to buy with a potential saving of up to £15,000 to tempt them.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (RICS), said: “Of course, it’s always transactions rather than more volatile house prices which provide a more reliable assessment of market strength.

“Although mostly reflecting transactions agreed several months previously, these figures demonstrate remarkable resilience of buyers and sellers determined to beat the stamp duty deadline.”