Higher-rate Stamp Duty receipts from landlords and second-home buyers now represent the majority of takings in over half of English local authorities, according to recent analysis. This shift highlights the growing influence of additional property purchases on local government revenues, with significant regional variations across England.

Rising Impact of Higher-Rate Stamp Duty

Paragon Bank’s review of government data reveals that in the 2024/25 financial year, higher-rate additional dwelling (HRAD) transactions accounted for at least 50% of total Stamp Duty receipts in 164 English local authorities. This marks a substantial increase from just 62 councils in 2016/17, the year the 3% surcharge on additional homes was introduced. As a proportion of all English local authorities, the figure has risen from 22% to 56% over this period.

Creating a Two-Tier Market

Louisa Sedgwick, Paragon’s director of mortgages, commented on the long-term effects of the Stamp Duty surcharge. She noted that while the surcharge was intended to moderate buy-to-let and second-home demand, it has instead entrenched additional-property purchases as a core source of Stamp Duty revenue. “A decade on, the receipts data points to a more complicated outcome,” she said.

Sedgwick highlighted that landlords have already faced an increase to the surcharge in 2024, which has shifted transactions towards northern regions where property prices tend to be lower. She warned of the risk of creating a two-tier market with uneven investment, particularly in southern areas, potentially leading to housing stock shortages and rental inflation.

Local Authorities with High Stamp Duty Shares from Additional Properties

In 8% of local authorities, additional property purchases contributed to at least three-quarters of all Stamp Duty receipts. Kingston upon Hull recorded the highest HRAD share, with 97% of its Stamp Duty receipts coming from additional dwelling transactions in 2024/25, up from 68% in 2016/17. Sandwell and Blackpool followed closely with 92%, both showing significant increases since 2016/17.

Other notable areas with high HRAD shares include Hyndburn and Barking and Dagenham at 89%, Stoke-on-Trent at 85%, and Burnley and Leicester at 82%. Wolverhampton, Lincoln, Middlesbrough, Nottingham, Salford, Luton, and Manchester all reported shares of 79% or above.

Regional Concentrations of Additional-Property Receipts

Many of the local authorities with the highest HRAD shares are large urban centres in the Midlands and North, rather than traditional second-home hotspots. Manchester, Salford, and Wolverhampton now derive at least three-quarters of their Stamp Duty receipts from additional property purchases.

The Yorkshire and the Humber region has the highest concentration, with 14 local authorities (93% of the region’s councils) receiving at least half of their Stamp Duty receipts from HRAD transactions. The North East follows closely with 11 councils (92%) and the North West with 31 councils (89%).

In the East Midlands, 16 councils (67%) meet the 50% threshold, while London has 20 councils (61%). The South East and East of England show lower proportions, with 34% and 33% of local authorities respectively generating at least half of their Stamp Duty receipts from additional property purchases.

Policy Background

The Stamp Duty surcharge on additional homes was introduced at 3% in April 2016 and was increased to 5% in the 2024 Autumn Budget. This policy aims to curb demand for buy-to-let and second homes but has also shifted the dynamics of property investment and local government revenue streams.

What this means for landlords

For landlords, the data underscores the ongoing significance of additional property purchases within the housing market and the fiscal landscape. The increased surcharge and its regional impact suggest that investment strategies may need to adapt, particularly with the shift towards northern regions where property prices are generally more affordable.

Landlords should be aware of the potential for a two-tier market, which could influence rental demand and pricing, especially in southern areas where investment may become less concentrated. Understanding these trends is crucial for making informed decisions about portfolio growth and management in the current policy environment.

Source: Based on reporting from Property118

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