Can stamp duty keep pace with rising prices?
Labour’s increased stamp duty surcharge on second homes and buy-to-let properties generated an additional £870m for the Treasury in the 2024-25 financial year, according to official government figures analysed by Coventry Building Society.
The chancellor raised the stamp duty surcharge for additional properties from 3% to 5% in the 2024 Budget, resulting in total tax receipts of £5.4bn from property sales during the financial year. Since April, buyers of second homes or buy-to-let properties have paid an additional 5% in stamp duty on top of existing bands, compared with primary residences.
Record tax collection
Overall, buyers paid £13.7bn in stamp duty between January and November, representing a 19% increase from the £11.5bn collected during the same period in 2024, a report from The Telegraph noted. Some 211,700 transactions were subject to the stamp duty surcharge in the first 11 months of 2025, raising £2.7bn.
David Fell of estate agency Hamptons noted that roughly one-third of the additional tax revenue came from buyers rushing to complete purchases before the deadline. “There were 164,000 completions in March 2025, the highest figure since the 165,000 recorded in September 2021, when the previous stamp duty holiday ended,” Fell said.
The average stamp duty bill increased by about £2,400 in April when the threshold was lowered from £250,000 to £125,000, according to Fell. “Meanwhile, the impact of the second-home surcharge hike last November, coupled with the lower threshold, has increased average investor stamp duty bills by around £8,500,” he said.
Housing market impact
The UK housing market has shown signs of cooling under the new taxation regime. Average asking prices for newly listed homes across the UK fell by 1.8% in the four weeks to 6 December, to £358,138, according to Rightmove.
James Cleverly, the shadow housing secretary, criticised the levy, stating it is “a bad tax” and “an unfair tax.” “It is a tax on aspiration, on working hard and on investing in you and your family’s future,” Cleverly said.
However, Hannah Aldridge, senior research and policy analyst at the Resolution Foundation, described property wealth as an “incredibly undertaxed” area of the economy in an interview with Independent.
Jonathan Stinton of Coventry Building Society described stamp duty as “the hidden sting in the tail of buying a home,” noting the system uses thresholds introduced in 2014 whilst house prices have risen significantly since then.
The Office for Budget Responsibility has estimated that tax receipts on residential property will rise to £19.7bn by 2030-31.
