Want 1.5 Million New Homes? Cut Stamp Duty on Investors

The Government’s pledge to deliver 1.5 million new homes by the end of this Parliament is ambitious — and necessary. But if ministers are serious, they’ll need the private sector onside. Right now, it’s not. One simple fix? Slash the stamp duty surcharge on additional residential properties.

What’s the Problem?

Markets don’t run on numbers alone — they run on confidence. For years, small landlords and private investors helped prop up the housing market, adding much-needed supply when banks froze lending after the Global Financial Crisis. Some developers even stayed afloat thanks to buy-to-let (BTL) buyers.

But their reward? A barrage of punitive tax changes:

• Mortgage interest relief cut

• Income tax applied to turnover

• The Higher Rates on Additional Dwellings (HRAD), introduced by George Osborne

• Now increased from 3% to 5% under Jeremy Hunt

Add to that rising mortgage rates, looming EPC upgrade costs, and the uncertainty of the Renters’ Rights Bill, and it’s no surprise the PRS (Private Rented Sector) is shrinking fast.

The Numbers Don’t Lie

HMRC’s own data shows the stamp duty surcharge is hurting transactions without raising much revenue:

There were 191,500 HRAD transactions in 2023–24, down 20% from the previous year
Total HRAD receipts fell to £4.56 billion, a 20% drop
That’s despite the surcharge rising to 5% in the last Budget

This tax also penalises ordinary home movers who haven’t yet sold their previous home — they must pay the surcharge upfront, then reclaim it.

And the trend is worsening. With Help to Buy gone, all SDLT holidays ended, and HNW non-dom changes on the way, the market is being squeezed from all sides.

A Fix That Works

Cutting or scrapping the additional property surcharge could unlock stalled investment from smaller landlords and developers — precisely the people who can deliver new homes faster than the state ever will.

It won’t deter first-time buyers. It won’t shut the Bank of Mum and Dad. What it will do is:

• Bring BTL investors back into the market

• Stimulate demand across the second-hand market

• Feed demand into local supply chains — decorators, tradespeople, materials

• Rebuild confidence after a bruising 18 months

Reality Check

Even with HRAD in place, tax receipts are falling. Transactions are slowing. Investment is flatlining. And as confidence deteriorates further, so does the hope of hitting that 1.5m homes target.

Let’s be clear: a confident market is a productive market. Right now, policy punishes the very investors who could help deliver national housing goals.

Our Take

If Government really wants to stimulate supply, it’s time to cut the stamp duty surcharge — or risk missing the housing target entirely.