Buy-to-let investors and second-home buyers are now responsible for the majority of stamp duty receipts in more than half of English local authorities, according to new analysis from Paragon Bank.
The lender’s review of Government data found that higher-rate additional dwelling (HRAD) transactions accounted for at least 50% of stamp duty revenues in 164 English councils during the 2024/25 financial year.
That marks a sharp rise from just 62 local authorities in 2016/17, shortly after the original 3% stamp duty surcharge on additional properties was introduced.
Paragon said the figures point to a major shift in the structure of stamp duty revenues, with landlords and second-home purchases now playing a dominant role in many parts of England.
NORTHERN EXPOSURE
The trend is particularly pronounced across northern regions and urban centres, rather than traditional second-home hotspots.
In Kingston upon Hull, HRAD purchases accounted for 97% of all Stamp Duty receipts, while Sandwell recorded 92%.
Cities including Manchester, Salford and Wolverhampton all derived around 80% or more of Stamp Duty revenues from additional-property transactions.
Regionally, Yorkshire and the Humber recorded the highest concentration, with 93% of local authorities generating the majority of stamp duty receipts from HRAD transactions, followed by the North East at 92% and the North West at 89%.
The picture was notably different in southern England, where only a third of councils in the South East and East of England generated more than half of stamp duty revenues from additional-property purchases.
The analysis comes after the stamp duty surcharge on additional homes was increased from 3% to 5% in the 2024 Autumn Budget.
COMPLICATED OUTCOME
Louisa Sedgwick (main picture), Managing Director of Mortgages at Paragon Bank, says: “The stamp duty surcharge was designed to moderate buy-to-let and second-home demand, but the longer-term effect has been to entrench additional-property purchases as a core source of stamp duty revenue.
“A decade on, the receipts data points to a more complicated outcome. In many parts of England, these transactions now account for a much larger share of stamp duty revenues than they did at the outset.”
TWO TIER MARKET
She adds: “The figures suggest that additional-property purchases have become an increasingly important component of the stamp duty tax base, but there is only so far that landlords can go.
“They have already been hit with an increase to the surcharge in 2024 and the impact of the policy has been to pivot transactions to northern regions, where property is typically cheaper.
“The danger moving forward is that we create a two-tier market, with uneven investment across the country, particularly in the south, which could lead to stock shortages and rental inflation.”
