The stamp duty surcharge has quietly become one of the Treasury’s most reliable money makers. New figures show that higher charges on landlords and second-home owners pulled in almost £900 million more in a single year, even though house prices barely moved.
For anyone watching UK property tax creep steadily upwards, this feels less like a surprise and more like confirmation of the direction of travel.
A big jump without a booming market
In the 2024 to 25 tax year, more than £5.4 billion was raised from stamp duty on additional properties. That’s a 19% increase on the year before, according to HM Revenue & Customs figures.
Overall residential stamp duty receipts climbed to £10.4 billion, up from £8.57 billion. The key point is this did not happen because homes suddenly became more expensive. Prices were broadly flat over the period.
Ian Futcher from Quilter summed it up neatly, saying: “Residential stamp duty receipts rose 21% over the year, despite house prices being broadly flat. This isn’t a story of booming values but of a system that has become increasingly punitive.”
That word, punitive, crops up a lot in conversations with landlords right now.
Why the surcharge matters more than ever
The extra charge on second homes and buy-to-let properties has been around since 2016. Originally set at 3% points on top of standard rates, it jumped to 5% points in October 2024.
The figures only include six months at the higher rate. In other words, the full annual impact is yet to show up in the data.
For landlords, the maths is simple. On a £400,000 purchase, the surcharge alone can add £20,000 to the bill. That’s before legal fees, borrowing costs or refurbishment.
It is no coincidence that wealth managers are reporting cooler appetite for residential investment. Iain McLeod from St James’s Place said the increased surcharge “continues to cool the appetite for residential property”.
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A deadline that pulled buyers forward
Another factor behind the surge in receipts was timing. Many buyers rushed to complete before 1 April, when stamp duty thresholds were lowered across the board.
The threshold for paying stamp duty dropped from £250,000 to £125,000. For first-time buyers, the nil-rate band fell from £425,000 to £300,000.
For some, completing on 31 March rather than 1 April saved as much as £11,250. That kind of cliff edge tends to drag transactions forward, temporarily inflating tax receipts.
It also masks what may come next. Once that pipeline clears, transaction volumes can dip.
London and the South still dominate
Two thirds of stamp duty from additional properties came from London, the South East and the East of England. Together, those regions raised £3.3 billion.
There was also £225 million raised from the non-resident surcharge, which adds an extra 2% for overseas buyers. More than 19,000 transactions were caught by that charge alone, before any refunds.
The message is clear. Property-related taxes are increasingly concentrated on specific groups and locations.
Politics and reform, or lack of it
Rachel Reeves has been criticised for not reforming stamp duty more broadly in her recent budget. The tax has long been labelled unfair and distorting, particularly by those who argue it discourages people from moving.
Opposition parties have been happy to criticise but less united on solutions. Promises to scrap or overhaul stamp duty tend to fade once the cost to the Treasury becomes clear.
When a single surcharge can generate nearly £900 million in extra revenue, it’s easy to see why.
What this means for landlords and buyers
For landlords and property investors, the direction is hard to ignore. Higher upfront costs reduce yields and make portfolio expansion harder to justify. For buyers of second homes, especially in higher-value areas, the surcharge can materially change affordability.
For the wider housing market, this is less about prices and more about friction. The more expensive it is to move or invest, the more activity slows.
Stamp duty may not grab headlines like interest rates, but right now it’s doing a lot of the heavy lifting for the Treasury.
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