Stamp duty surcharge gives first-time buyers an advantage over landlords – government

The government admits the higher rates of stamp duty on additional dwellings are designed to penalise landlords while supporting first-time buyers.

In the 2024 Autumn Budget, Chancellor Rachel Reeves announced that the stamp duty surcharge on additional homes would rise from 3% to 5%.

The Budget also lowered Stamp Duty thresholds in England, with the exemption for first-time buyers dropping from £425,000 to £300,000 and for standard residential properties falling from £250,000 to £125,000.

Have an advantage over landlords

In a written question, Liberal Democrat MP Roz Savage asked: “To ask the Chancellor of the Exchequer, what assessment HM Treasury has made of the potential impact of Stamp Duty Land Tax surcharges on additional properties on levels of long-term participation in the private rented sector.”

Labour MP Dan Tomlinson said: “The Higher Rates for Additional Dwellings (HRAD) within Stamp Duty Land Tax (SDLT) ensure that those looking to purchase a first property or move home have an advantage over second home buyers, landlords and companies purchasing residential property.”

However, despite the government’s claims, landlords are particularly hurt by the additional surcharge and face paying hundreds of pounds extra.

Drop in supply

Many industry experts warned at the time of the 2024 Autumn Budget that increasing the additional surcharge to 5% would reduce supply and ultimately hurt tenants.

The head of the Institute for Fiscal Studies, Paul Johnson, said on X (formerly Twitter): “In order to ultimately keep people in much-needed and affordable private rented homes, we continue to stress the importance of support for the private rented sector, including incentives for landlords to invest rather than continuing to penalise them through regulatory bombardment and increasing costs.

“I have long said stamp duty is among our worst taxes. So what do we have? An increase for those buying second properties. You might think, fine: a tax on rich people and landlords. But those looking to rent will pay part of the cost as fewer properties are made available.”

In the 2025 Autumn Budget, Ms Reeves also raised tax rates on dividends, property, and savings income by 2 percentage points, which would increase the tax landlords pay on rental income, creating more financial pressure for landlords.