Landlords and second-home buyers now account for the majority of stamp duty receipts in more than half of English local authorities, according to analysis by Paragon Bank.
The lender said higher-rate additional dwelling transactions generated at least 50% of total stamp duty receipts in 164 local authorities in the 2024/25 financial year.
That compares with 62 local authorities in 2016/17, when the stamp duty surcharge was first introduced, representing a 164% increase. As a proportion of English councils, the figure has risen from 22% to 56%.
Paragon said the analysis pointed to a shift in the stamp duty tax base, with additional property purchases becoming a more significant source of receipts across large parts of England.
REGIONAL DIVIDE
The areas with the highest reliance on higher-rate additional dwelling receipts were not limited to traditional second-home or holiday markets.
Paragon said many were large urban authorities in the Midlands and North, suggesting that buy-to-let activity was a significant driver.
In 8% of local authorities, additional property purchases accounted for at least three quarters of total stamp duty receipts.
Kingston upon Hull recorded the highest share, with higher-rate additional dwelling transactions accounting for 97% of stamp duty receipts, up from 68% in 2016/17. Sandwell followed at 92%, up from 63%.
Other areas with high shares included Blackpool at 92%, Hyndburn at 89%, Barking and Dagenham at 89%, Stoke-on-Trent at 85%, Burnley and Leicester both at 82%, and Wolverhampton and Lincoln both at 81%.
Manchester, Salford and Wolverhampton all now derive at least three quarters of their stamp duty receipts from additional property purchases.
Regionally, 93% of local authorities in Yorkshire and the Humber generated at least half of stamp duty receipts from higher-rate additional dwelling transactions. The figure was 92% in the North East and 89% in the North West.
The proportion was lower in southern England, at 33% in the East of England and 34% in the South East.
SURCHARGE IMPACT
A 3% stamp duty surcharge on additional property purchases was introduced in April 2016, with the rate increased to 5% in the 2024 Autumn Budget.
Paragon said that while transaction volumes had softened in some markets, the receipts data suggested the policy had increased reliance on higher-rate purchases as a source of stamp duty revenue.
Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “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.”
