Stamp duty hike on second homes has had little impact on sales, says law firm

This follows Chancellor Rachel Reeves using October’s Budget to hike up the stamp duty surcharge for second properties from three per cent to five per cent overnight.

LCF Residential, which has a 27-strong team based across its offices in Leeds, Bradford, Harrogate and Ilkley, works with homebuyers, sellers, and estate agents throughout Yorkshire and beyond, as well as most UK mortgage lenders.

Julie Davis, head of LCF Residential, inset, said: “People buying second homes or investment properties were already subject to a higher rate of stamp duty prior to the Budget and adding an additional two per cent onto this doesn’t appear to have made any difference to the market so far. Out of the dozens of transactions we were working on, that were being bought by buy-to-let investors and second home buyers, each one has still gone ahead as planned.

“The Treasury’s aim with these changes was to give first-time buyers and those looking to move home an advantage over second home buyers and landlords. However, it remains to be seen whether these changes are enough to significantly alter that market.”

She added: “It’s also worth remembering that from 1st April 2025, stamp duty rates are changing for homebuyers, when the temporary increases to the thresholds that were put in place in 2022, come to an end.

“Homebuyers don’t currently pay stamp duty on properties below £250,000, but this will drop to the previous level of £125,000 in April.

"In addition, the threshold at which first-time buyers pay stamp duty will fall to £300,000 from £425,000 and although this might not affect too many first-time buyers in the North, it will have an impact in other parts of the country.”

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The anecdotal evidence follows news that the stamp duty surcharge for landlords and others buying second homes brought in £1.5bn for the Treasury in the final three months of last year, jumping 31 per cent from the previous quarter, according to Coventry Building Society.

The firm crunched quarterly stamp duty data released by HMRC, where overall receipts lifted 16 per cent quarter-on-quarter.

Further analysis revealed that more than 30,000 first-time buyers paid stamp duty last year, despite the nil-rate thresholds being temporarily extended. The average price of a first-time buyer home in London was recorded at £444,548, meaning the stamp duty on an average priced first-time buyer home in the capital will shoot from £972 to £7,222 in April.

Jonathan Stinton, Coventry Building Society head of intermediary relationships, said: “There’s a balance the Treasury needs to strike between collecting more tax receipts and keeping the property market moving. Since the Budget it’s been landlords who have been squeezed harder by the taxman. But the real sting in the stamp duty tail is the end of the temporary thresholds in April.”