Second home and buy-to-let transactions now account for the majority of stamp duty receipts in over half of English local authorities, analysis by Paragon of government data has shown.
It found that this was up from under a quarter when the stamp duty surcharge was first introduced.The 3% stamp duty surcharge came into force in April 2016 to cool buy-to-let and second-home demand and was extended to 5% in the 2024 autumn Budget.
Income from higher‑rate additional dwelling (HRAD) stamp duty transactions accounted for at least half of total stamp duty receipts in 164 English local authorities, up from 62 in 2016/17, a 164% increase.
As a share of all English councils, that rose from 22% to 56%.
Paragon found it was even more prevalent in some regions.
Many of the councils where buy‑to‑let and second‑home purchases account for the highest proportion of stamp duty receipts are not traditional holiday or second‑home hotspots, but large urban authorities in the Midlands and North, suggesting the transactions are driven by buy-to-let purchases. The higher-rate tax generates the majority of stamp duty receipts in 93% of local authorities in Yorkshire and 92% in North East.
HRAD transactions accounted for 97% of total stamp duty receipts in Kingston upon Hull and 92% in Sandwell in the West Midlands.
Locations including Manchester, Salford and Wolverhampton now derive three‑quarters or more of their stamp duty receipts from additional‑property purchases.
Paragon Bank managing director of mortgages Louisa Sedgwick 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.
“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.”
