Buy-to-Let and Second Homes Drive Stamp Duty Receipts in 2026

As of May 2026, second home and buy-to-let transactions now account for the majority of stamp duty receipts in over half of English local authorities, according to an analysis by Paragon of government data. This is a significant increase from 2016/17, with a 164% rise in local authorities where these transactions account for at least half of total stamp duty receipts.

Impact on Buy-to-Let and Second Home Owners

Stamp Duty Surcharge

The 3% stamp duty surcharge was introduced in April 2016 to moderate buy-to-let and second-home demand. It was further increased to 5% in the 2024 autumn Budget. For instance, a landlord purchasing a second property worth £200,000 now pays £10,000 in stamp duty, up from £6,000 in 2016.

Regional Shifts

The policy has led to a pivot in transactions to northern regions, where property is typically cheaper. For example, in Kingston upon Hull and Sandwell in the West Midlands, HRAD transactions accounted for 97% and 92% of total stamp duty receipts respectively. Even in large urban authorities like Manchester, Salford, and Wolverhampton, three-quarters or more of their stamp duty receipts now come from additional-property purchases.

Implications for First-Time Buyers

Increased Competition

With the increase in buy-to-let purchases, first-time buyers may face more competition. For example, a first-time buyer looking at a £250,000 property in Manchester may now be competing with buy-to-let investors, potentially driving up prices.

Higher Stamp Duty Receipts

Despite the increased competition, the higher stamp duty receipts could lead to more funding for local services. In areas like Yorkshire and North East, where 93% and 92% of local authorities respectively derive the majority of their stamp duty receipts from higher-rate transactions, this could lead to significant local investment.

Frequently Asked Questions

How much is the stamp duty surcharge for second homes and buy-to-let properties?

As of the 2024 autumn Budget, the stamp duty surcharge for second homes and buy-to-let properties is 5%.

Which areas have the highest proportion of stamp duty receipts from buy-to-let and second home purchases?

Areas such as Kingston upon Hull and Sandwell in the West Midlands have the highest proportion, with 97% and 92% of total stamp duty receipts respectively coming from these transactions.

How has the stamp duty surcharge affected first-time buyers?

First-time buyers may face increased competition from buy-to-let investors, potentially driving up property prices. However, the higher stamp duty receipts could also lead to more funding for local services.

What is the trend in buy-to-let and second home purchases?

There has been a shift towards these transactions in northern regions, where property is typically cheaper. Areas like Manchester, Salford, and Wolverhampton now derive three-quarters or more of their stamp duty receipts from additional-property purchases.