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11/12/25 3:00 pm
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Higher Rate Additional Dwelling (HRAD) tax brought in £5.4 billion during the last financial year, a rise of £870 million, as BTL landlord purchases helped to swell the Treasury’s coffers.
The 211,700 additional dwellings transactions accounted for 20% of total residential transactions and 52% of residential receipts in 2024/25, compared with 185,500 transactions the previous year, when the receipts total was only slightly higher (53%).
HMRC says the rise in tax paid is partly explained by the uplift to the HRAD surcharge rate from 3% to 5% which took effect in October 2024. It adds: “The increase in total stamp tax receipts is also partially explained by forestalling effects, where buyers sought to purchase properties before the changes to SDLT thresholds became effective from 1st April 2025.”
Landlords now pay stamp duty rates from 5% to 17% of the property purchase price. According to some financial experts, if the government continues to make investing more difficult, fewer investors will buy rental properties - and the government risks jeopardising a major source of income.
Ian Futcher, financial planner at wealth management firm Quilter (pictured left), believes pressure on landlords has intensified. “Receipts from the higher rates on additional dwellings climbed by almost a fifth after the surcharge increased from 3% to 5%,” he says. “For many investors, the tax landscape is now so onerous that the financial rationale for purchasing a property has weakened considerably, contributing to sluggish turnover in parts of the country.
“With surcharges higher, reliefs tighter and mortgage rates still elevated by historic standards, buyers need a clear understanding of both the upfront tax costs and the longer-term mortgage implications before committing.”
NRLA chief policy officer Chris Norris (pictured right) believes that at a time when renters across the country are already struggling to find a home, deterring investment in new long term, good quality rental housing is the last thing we should be doing.
He tells LandlordZONE: “As a country we cannot tax our way out of the housing crisis, and ministers need to recognise strengthening the supply of homes to rent as a priority.”
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