Higher-rate additional dwelling (HRAD) transactions – primarily buy-to-let and second homes – now account for the majority of Stamp Duty receipts in more than half of English local authorities, analysis from Paragon Bank revealed.
In the 2024/25 financial year, 164 local authorities generated at least 50% of their Stamp Duty income from HRAD transactions, up sharply from just 62 in 2016/17.
This represents an increase from 22% to 56% of all councils.
The data pointed to growing reliance on landlords and second-home buyers as a key source of tax revenue, particularly outside traditional holiday hotspots.
Regional patterns showed a clear divide, with northern areas far more dependent on HRAD activity.
In Yorkshire and the Humber, 93% of local authorities derived the majority of Stamp Duty receipts from additional property purchases, followed by 92% in the North East and 89% in the North West.
By contrast, this reliance was significantly lower in southern regions, with just 34% of councils in the South East and 33% in the East of England crossing the 50% threshold.
In some areas, the dominance of additional property transactions was even more pronounced.
In Kingston upon Hull, HRAD purchases accounted for 97% of Stamp Duty receipts, while Sandwell and Blackpool both recorded levels above 90%.
Major urban centres including Manchester, Salford and Wolverhampton also saw around three-quarters or more of receipts coming from these transactions.
The shift follows the introduction of a Stamp Duty surcharge on additional properties in April 2016, initially set at 3% and increased to 5% in the 2024 Autumn Budget.
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.”