The Treasury collected £541 million less in stamp duty from £5 million-plus home sales in the 18 months after the October 2024 Budget than in the previous 18 months, according to new analysis from Knight Frank published on 23 October.
The comparison covers sales in England before and after Rachel Reeves raised the second-home surcharge from 3 percent to 5 percent and set out plans to replace the non-dom regime. After adjusting for price moves so the £5 million threshold means the same in both periods, deals fell 14 percent to 2,208 from 2,569.
Investors watching the top end face a clear signal the day before the next fiscal event. Chancellor John Healey delivers his first Budget on 28 October, and the figures frame a direct choice between higher rates on paper and lower receipts in practice.
Sales fall as surcharge rises
Estimated stamp duty on £5 million-plus sales dropped 16 percent to £2.855 billion from £3.395 billion, Knight Frank said, using data from the Land Registry, LonRes and its own research. The estimates assume half of buyers paid both the second-home surcharge and the 2 percent overseas surcharge, applied evenly across sales.
Higher rates did lift some extra revenue. An estimated £201 million more was collected in the second period because of the higher second-home surcharge. The £541 million figure is the net loss after that extra revenue is counted, the agency said.
Tom Bill, head of UK residential research at Knight Frank, said the pattern shows how mobile high-value demand can be. “Sellers increasingly need to reflect the tougher mortgage rate setting when asking prices,” he said in analysis accompanying the wider market update.
Budget pressure builds on Healey
The agency said Healey is unlikely to cut stamp duty in this week’s Budget, but lobby groups are pressing for measures to attract overseas investors. Foreign Investors for Britain is campaigning for a new investor visa based on a minimum £2.5 million investment and a flat annual tax, which it claims could draw large inflows over a decade.
Reeves replaced non-dom status with a regime that exempts newcomers’ foreign income and gains from UK tax for their first four years of residence. Critics link that change, alongside the surcharge rise and higher borrowing costs, to weaker prime activity.
There are signs of stabilisation in parts of prime London. September brought the first quarter of price growth in prime central London for four years at 0.3 percent, while exchanges in prime central and prime outer London were only 2.5 percent lower in the year to September, against a 14 percent fall in March, Knight Frank said.
This follows Landlord Knowledge’s report on the £18.5 million SDLT gap flagged in the six-home rule, which showed how technical stamp duty boundaries can change investor behaviour. The latest figures extend that theme from a niche relief to the whole top bracket.
Landlords with exposure to high-value stock in London and the South East have most to track in the calls for a Budget stamp duty cut to clear unsold rentals. A freeze keeps costs predictable but does little for liquidity, while any easing would need to be weighed against other tax rises.
For the wider market, the data underlines a point made in Knight Frank’s full analysis of the £541 million shortfall: headline rate rises do not guarantee higher takes when deals can pause or move.
What this means for landlords
- If you hold £2 million-plus stock or South East houses: price sensitivity is high – check asking levels against the 14 percent drop in top-end deals before listing.
- If you buy through a company or second home: the 5 percent surcharge stays central to Budget talk – model purchases with it in place rather than betting on a cut.
- Watch for: any investor visa or overseas buyer measure on 28 October, which could support demand at the top without changing SDLT rates.
- Bottom line: the Treasury took less despite higher rates, which strengthens the case for realism on pricing and deal timelines into winter.
Editor’s view
Taxing transactions harder only works if transactions still happen. A half-billion shortfall at the top end is hard to ignore the day before a Budget, and landlords should read it as a warning against assuming higher rates mean a stronger market.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 27 October 2026
Sources: Knight Frank, Land Registry, LonRes
Related reading: MPs tell ministers to consult on stamp duty reform by year end
