Transaction Taxes and Housing Market Dynamics: New Evidence from a Quasi-Natural Experiment

72 Pages Posted: 14 Jan 2022 Last revised: 25 Oct 2023

See all articles by Yunlong Huang

Yunlong Huang

University College London

Stanimira Milcheva

University College London

Date Written: March 14, 2022


We assess the effect of a temporary removal of housing transaction taxes in 2020 in the UK, the Stamp Duty Holiday (SDH), on housing prices, transaction and listing volumes, and liquidity. Using a Nash bargaining model, we show that the SDH would lead to an increase in prices and a greater surplus for sellers. We construct several rich datasets of housing transactions in England and estimate difference-in-differences (DiD) models. We show that the SDH led to a boost in market activity and prices during the Covid pandemic, resulting in a 53% increase in transactions and around 2% increase in prices. We confirm the predictions of the Nash model and show that sellers were in a stronger bargaining position which strengthened as the SDH deadline approached allocating the more surplus towards the sellers. While the SDH achieved its intention to stimulate housing market activity during the early stages of the pandemic and to enable the housing market to adjust to a new way of living and commuting, it inadvertently reduced housing affordability for the people most in need of housing.

Keywords: Property transaction tax, stamp duty land tax, house prices, price spread, redistribution effects, bargaining power, big data.

Suggested Citation

Huang, Yunlong and Milcheva, Stanimira, Transaction Taxes and Housing Market Dynamics: New Evidence from a Quasi-Natural Experiment (March 14, 2022). Available at SSRN: or

Yunlong Huang

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Stanimira Milcheva (Contact Author)

University College London ( email )

1-19 Torrington Place
Bartlett School of Sustainable Construction
London, London WC1E 7HB
United Kingdom


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