In the first month following the stamp duty surcharge increase announced in the Budget, landlords bought 10.7% of homes sold in Great Britain, above the 10.2% 2024 average, new data shows.
Despite an overnight rise in costs, the number of investors who pulled out of agreed purchases last month remained at half the level seen post-mini-Budget when interest rates spiked.
Chart 1 – Landlord purchases as a proportion of all accepted offers:
Source: Hamptons
It’s been a full month since Labour’s first Budget and the announcement that the stamp duty surcharge (SDLT) on second home purchases would increase from 3% to 5%. Our analysis of sales agreed in November suggests that it’s had a limited headline impact on landlord behaviour. 10.7% of sales agreed across Great Britain in November went to a landlord, above the 2024 average to date of 10.2% (table 1).
While landlord purchases remain well below the 2015 peak of 15.7%, the figure remains broadly in line with more recent years when buy-to-let purchases have become rarer. Landlords accounted for 10.8% of buyers in 2019 and 10.9% in 2020 (chart 1), years when movers made up a much larger share of the market.
Analysis by Hamptons shows that most investors who agreed deals in advance of higher stamp duty rates being announced in the Budget have remained committed to their purchase. Twenty-eight percent of sales agreed by investors in the three months running up to the stamp duty surcharge increase were either renegotiated or remarketed, around half the level recorded during the aftermath of the 2022 mini-budget when mortgage rates rose quickly.
The increase in stamp duty rates means that on a typical £300,000 purchase an investor pays £17,500 (5.8%), a mover £2,500 (0.8%), and a first-time buyer nothing. These figures will rise by an extra £2,500 in April 2025 for investors and movers.
The introduction of the 3% SDLT surcharge has increasingly pushed investors towards the North of England where stamp duty bills tend to be lower because of lower property prices. Increasing the surcharge from 3% to 5% is likely to exacerbate this.
Since the introduction of the surcharge, the largest falls in investor purchases have been in the South of England (particularly outside London) where high stamp duty bills can make buy-to-let unviable. On a £500,000 purchase, the stamp duty bill for an investor now stands at £37,500 (7.5%), rising to £40,000 (8.0%) from 1 April 2025.
Table 1 – Change in the share of homes bought by landlords in Nov-15 and Nov-24:
| Homes bought by a landlord Nov-24 | Change in homes bought by a landlord (Nov-24 v Nov-15) | Average gross yield on new buy-to-let purchase | |
| North East | 18.4% | 0.2% | 9.7% |
| Wales | 8.3% | -3.2% | 8.8% |
| Yorkshire & Humber | 12.1% | -4.2% | 8.3% |
| North West | 9.8% | -4.4% | 8.3% |
| Scotland | 5.0% | -5.1% | – |
| East Midlands | 12.4% | -5.9% | 7.2% |
| South East | 10.2% | -6.1% | 6.4% |
| London | 14.7% | -6.2% | 5.7% |
| East | 9.2% | -8.2% | 6.6% |
| West Midlands | 13.1% | -9.0% | 7.0% |
| South West | 9.7% | -10.5% | 6.6% |
| Great Britain | 10.7% | -6.6% | 7.1% |
Source: Hamptons
In contrast, landlord purchases have held up more strongly in Northern England, with investors in the North East purchasing a larger proportion of homes than before the introduction of the surcharge in 2016. Last month, 18.4% of homes sold in the North East were bought by a landlord, 0.2% above November 2015 levels before the stamp duty surcharge was introduced. Here, the average investor paid £115,000 for their buy-to-let, meaning their stamp duty bill would have risen from £3,450 to £5,750.
A growing share of buy-to-let purchases in the North of England are by investors who live in the South of England and have been attracted by lower stamp duty bills alongside higher yields and faster house price growth over the last few years (chart 2). The average gross yield achieved on a buy-to-let purchase in the North East this year was 9.7%, significantly higher than the average 5.7% yield achieved in London (table 1).
Chart 2 – Share of investor purchases in Northern England where the landlord lives in the South of England:
Source: Hamptons
When the 3% SDLT surcharge was introduced in 2016, the government estimated it would raise between £700m-£900m per year. In reality, it raised between two and three times this amount. The government estimates that increasing the surcharge from 3% to 5% will raise a further £400m per year, reflecting only a modest decline in investor purchases. The relative strength of buy-to-let purchases in November supports these figures.
In Scotland, where the stamp duty surcharge rose from 6% to 8% on 5 December 2024, revenue from investors and second home buyers accounted for an overage of 31% of total stamp duty revenue during 2024 (January-October 2024). This suggests a limited number of landlord purchases. Our figures show that investors purchased 5.8% of homes in Scotland so far this year, down from 10.3% when the initial stamp duty surcharge was introduced (table 1). Meanwhile, in England, the share of revenue from investors and second home buyers stands at 47% (January-September 2024).
Rental growth
Rental growth dropped to the slowest rate for four years in November. Average rents on newly let properties in Great Britain rose by just 2.6% over the last 12 months (table 2), the lowest annual increase since the 2.4% recorded in November 2020. However, between November 2020 and November 2024, rents rose by a total of 31.6%, outpacing average earnings.
The fastest growth continues to be in Scotland and Northern England, where rents are up 7.2% and 5.7%, respectively, over the last 12 months. London rents nudged up just 0.4% over the last 12 months, the slowest growth in the country. The rest of Southern England saw rents rise by between 1.8% and 2.9% over the last year (table 2).
The number of homes available to rent across Great Britain this year has consistently remained above last year’s levels, putting downward pressure on rental growth. There are currently 13% more homes to rent across Great Britain than in November 2023, when stock levels were near rock bottom. More notably, there were just 10% fewer rental homes on the market last month than in November 2019 when rental stock levels were last materially higher. In 2023 stock levels ran at an average of 41% below equivalent 2019 levels.
Table 2 – Rental growth on newly let properties in November 2024:
| Region | Average monthly rent | YoY % | YoY £ |
| Greater London | £2,425 | 0.4% | £10 |
| Inner London | £3,301 | 4.0% | £127 |
| Outer London | £2,259 | -0.5% | -£12 |
| East of England | £1,311 | 1.8% | £23 |
| South East | £1,450 | 2.9% | £41 |
| South West | £1,195 | 2.9% | £33 |
| Midlands | £993 | 5.0% | £48 |
| North | £942 | 5.7% | £51 |
| Wales | £842 | 4.4% | £35 |
| Scotland | £989 | 7.2% | £66 |
| Great Britain | £1,382 | 2.6% | £35 |
| Great Britain (Excluding London) | £1,114 | 3.9% | £41 |
Source: Hamptons
Aneisha Beveridge, head of research at Hamptons, said: “Early signs suggest that new landlords have shown relative resilience to yet another cost increase. While the number of buy-to-let purchases by landlords remains muted by historic levels, their numbers have not collapsed. However, purchases are confined to the Midlands and Northern England which are becoming buy-to-let heartlands where the surcharge bites slightly less hard.
“While no landlord will welcome a tax rise, falling interest rates next year will likely push buy-to-let returns to near the top of investment league tables. With savings rates heading closer to 3%, gross yields in Northern England of above 8% will increasingly attract money that would previously have gone elsewhere. While political headwinds haven’t gone away, these risks and added costs are increasingly being priced into buy-to-let returns in the form of higher yields.
“After an unprecedented four-year boom, rental growth for newly let properties has slowed to a crawl. The current level of growth is similar to pre-covid times when rents typically rose between 2% and 3% a year. However, the forces that pushed up rents haven’t entirely gone away. Tenants renewing contracts continue to see increases well above these levels, but the pace of these increases will slow as their rents climb closer to market rates.”
