Why Landlords Now Pay Most Stamp Duty in 164 UK Councils

Kingston upon Hull is the unlikely capital of UK landlord taxation. According to Paragon Bank's analysis of HMRC data published on 6 May 2026, 97% of stamp duty collected in Hull during the 2024/25 financial year came from buy-to-let and second-home purchases. Sandwell and Blackpool are not far behind on 92%. Manchester, Salford and Wolverhampton each generate three quarters or more of their stamp duty take from additional-property transactions. Across England, 164 local authorities (56% of all councils) now derive more stamp duty from landlord and second-home buyers than from owner-occupiers. The 5% surcharge introduced in October 2024 to deter additional-property buying has done the opposite. It has cemented landlords as the core tax base of half the country.

Five numbers tell the story. 56% of English councils now lean on landlords for the majority of their stamp duty receipts, up from 22% in 2016 when the surcharge was first introduced at 3%. 5% is the current Higher Rates for Additional Dwellings (HRAD) surcharge, applied on top of every standard band since 31 October 2024. £125,000 is the standard nil-rate threshold restored on 1 April 2025 after the temporary £250,000 holiday expired. £18,750 is the SDLT cost of an investor buying a £350,000 buy-to-let in 2026, almost three times what an owner-occupier pays on the same property. And 164 is the count of councils where the maths above is now the norm, not the exception.

What Paragon Bank actually found

The headline figure most commentators have run with is the 56%. The granular data underneath it tells a more useful story for investors. Paragon's analysis identifies two distinct concentrations of landlord-driven stamp duty: traditional second-home hotspots like Kensington and Chelsea or Cornish coastal authorities, and large urban authorities in the Midlands and North where the buying is overwhelmingly buy-to-let rather than holiday property. Hull and Sandwell sit firmly in the second group. There are no Cornish beaches in Sandwell.

That regional skew matters because it identifies where investor cash is still flowing despite the surcharge. The councils with the highest HRAD share are also, broadly, the councils with the lowest average property prices and the highest rental yields. Hull's average sold price hovered near £140,000 through 2025 according to ONS House Price Index data. Sandwell tracked at £180,000. The 5% surcharge on a £150,000 property is £7,500. On a £600,000 London flat the same surcharge is £30,000. Investors have voted with their cheque books. The deals that still work are in the cheaper bands where the surcharge cost is recoverable in two to three years of net rental income.

Why the 5% surcharge backfired

The Treasury raised the additional-property surcharge from 3% to 5% in the Autumn Budget on 30 October 2024, presented at the time as a measure to support first-time buyers by easing competition for entry-level stock. Eighteen months in, the data shows the lever did not pull as expected. Total HRAD transactions did fall, by roughly 17% year on year according to HMRC's monthly transaction data. But the receipts per transaction rose by even more, because the surcharge increase outpaced the volume drop. The Treasury collected more landlord stamp duty from fewer transactions. The councils that were already dependent on HRAD revenue became more dependent, not less.

The deeper problem is that the 5% rate was calibrated to discourage marginal buyers but did not discourage the inframarginal ones. A retiree buying their second Cornish cottage at £450,000 is largely insensitive to a £4,500 cost increase on a £200,000-plus stamp duty bill. A professional landlord buying a £130,000 Hull terrace at 9% gross yield can absorb the £7,500 surcharge across 18 months of net rental income. The buyers who exited the market are the borderline ones in the £200,000 to £300,000 range in southern English suburbs, exactly the segment first-time buyers were supposed to gain. The first-time buyer share of mortgage approvals nudged up by 1.2 percentage points across 2025, statistically meaningful but small relative to what was promised.

Where the BTL maths still works in 2026

The Paragon data is essentially a heat map of where buy-to-let still pays under the new surcharge regime. Three patterns emerge. First, sub-£200,000 stock in northern England and the Midlands continues to absorb the SDLT cost cleanly, with HRAD-share councils clustered around Hull, Sandwell, Liverpool, Stoke-on-Trent, Burnley, and similar northern industrial centres. Yields of 7-10% gross are still achievable, and the surcharge is a one-off cost recoverable within the first two years.

Second, the medium-priced Midlands belt (£200,000 to £350,000) is where the squeeze is sharpest. SDLT including HRAD on a £300,000 BTL is £15,000, around 5% of purchase price. With gross yields in the 5-6% range, the investor pays a year of rent in stamp duty alone. Read our north-south investment analysis for how this is reshaping portfolio allocation across the country.

Third, southern England's £400,000-plus stock is increasingly the preserve of cash buyers and lifestyle second-home buyers who treat SDLT as a transaction tax rather than an investment-return drag. Professional landlords have largely retreated from this segment. The councils where southern England SDLT is still landlord-heavy are concentrated in inner London zones with serviced-accommodation operations, where the maths is built on per-night yield rather than monthly rent.

How to model SDLT into a 2026 deal

The honest reality is that most spreadsheets investors used pre-2024 are quietly under-stating their post-tax position. A £200,000 BTL purchased in 2023 carried a £6,000 SDLT cost (3% on £200,000). The same purchase in 2026 carries £11,500 (£1,500 standard plus £10,000 HRAD). That extra £5,500 increases the effective purchase price by 2.75%, which on a 6% gross yield is half a year of rental income. If your model still uses the pre-Autumn 2024 SDLT figures, you are quietly inflating projected returns.

Three practical adjustments fix the model. Use the current 5% HRAD rate on the full purchase price, recognising that the surcharge applies to every band including the £125,000 nil-rate zone. Add SDLT to your money-in line for ROI purposes, not your year-one expense, because it cannot be recovered through ongoing rental cashflow without selling. And model a sensitivity case for a possible 6% or 7% surcharge in a future Budget, given the Treasury's revealed preference for raising HRAD rather than cutting it.

A structured deal analyser with current SDLT logic baked in saves the calculation error that creeps into manually-built spreadsheets. A portfolio growth planner takes the same logic across a multi-property pipeline, surfacing the cumulative SDLT drag on a five-property buying plan. The error a single investor makes per deal is small. The compounding error across a ten-deal pipeline is the difference between hitting a portfolio yield target and missing it by 80 basis points.

The 2026/27 policy outlook

The Spring Statement on 26 March 2026 left SDLT untouched, but the Treasury's medium-term fiscal forecasts assume rising HRAD receipts as part of the deficit-reduction path. The Office for Budget Responsibility's March 2026 Economic and Fiscal Outlook projected HRAD receipts rising from £4.8 billion in 2024/25 to £6.2 billion by 2028/29. Roughly two thirds of that increase comes from forecast property-price inflation pulling more transactions into higher SDLT bands. The rest comes from forecast volume recovery as the post-2024 transaction trough corrects.

If you are an investor planning a 2026 purchase, three timing observations matter. The Autumn 2026 Budget (likely 12 November based on the Treasury's usual rhythm) is the next material risk window. Political pressure to raise HRAD again is moderate but not zero, particularly if first-time buyer activity disappoints. Buyers exchanging contracts before late October have rate certainty. Those targeting completions in November or later carry timing risk. Read our limited company structuring piece for how the SDLT cost interacts with corporate purchase decisions, because the surcharge does not disappear inside a corporate wrapper but the wider tax position can change the net economics.

One closing thought. The Paragon data is being read by some commentators as a story about landlord resilience: see, even the 5% surcharge did not stop them. That misses the more useful read. The data is a story about geographic concentration. The BTL market that survived the 2024 surcharge is heavily clustered in a specific kind of council: cheap stock, decent yields, weak owner-occupier demand. The investors who succeeded in 2025 and into 2026 mostly fished in that pool. The investors who tried to keep buying southern stock at 4% gross yield with a 5% surcharge bolted on top mostly lost. The 2026 lesson is that SDLT is now a primary deal screen, not a closing-cost line item. It chooses your geography for you whether you want it to or not.