The additional-property surcharge on Stamp Duty Land Tax (SDLT - the tax paid on property purchases in England and Northern Ireland) was designed to cool buy-to-let demand. A decade on, the data suggests it has done something rather different: it has made the entire stamp duty tax base dependent on the buyers it was meant to discourage.

The Scale of the Shift

Analysis by Paragon Bank of government data shows that higher-rate additional dwelling (HRAD) transactions now generate at least 50% of stamp duty receipts in 164 English councils. That is 56% of all English local authorities. In 2016/17, when the 3% surcharge first came in under the Finance Act 2016, only 62 councils - 22% of the total - showed that split.

In around 8% of local authorities, HRAD purchases now account for at least three-quarters of all stamp duty income. Kingston upon Hull leads the table: HRAD transactions represented 97% of the city's stamp duty receipts in 2024/25, up from 68% in 2016/17. Sandwell reached 92%, Blackpool 92%, and Manchester, Salford, and Wolverhampton all topped 79%.

The regional picture is just as striking. In Yorkshire and the Humber, 93% of local authorities now generate at least half of their stamp duty revenues from HRAD transactions. The North East reached 92% and the North West 89%. By contrast, only 33% of local authorities in the East of England and 34% in the South East hit that threshold.

What the Rate Is - and What It Costs You

The rate is currently 5%. That surcharge was raised from 3% in the October 2024 Autumn Budget under the Finance (No. 2) Act 2024, and it applies on top of standard SDLT rates on every additional residential property you buy in England.

For example: on a property worth £250,000, standard SDLT for a basic-rate purchaser would be £2,500. Add the 5% additional-dwelling surcharge and your liability rises to £15,000 - six times as much. On a property worth £350,000, the surcharge alone adds £17,500 to your acquisition cost. These are material sums that change the yield calculation from day one.

The data from Paragon Bank shows that transaction volumes have softened in some markets following each rate rise. But the receipts data also shows that HRAD buyers have not disappeared. They have shifted their activity toward northern areas where lower property prices soften the absolute cost of the surcharge.

Policy Risk Is the Real Takeaway

Louisa Sedgwick, Paragon Bank MD of Mortgages, put it plainly: "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."

That entrenchment creates a political feedback loop. The more the Treasury relies on HRAD receipts, the more it is tempted to increase the surcharge again. A further rise from 5% to 7% - not current policy, but worth stress-testing - would add another £5,000 to the liability on a £250,000 purchase.

The threshold for what constitutes a "good deal" keeps moving. Always speak to your accountant before exchange to confirm your current SDLT liability and factor in the risk that the rate does not stay where it is today.