March 2026 marks ten years since the introduction of the stamp duty surcharge on second homes, a policy that significantly changed the financial landscape for property investors. Introduced on 1 April 2016 in England and Scotland, the additional tax was designed to discourage the purchase of multiple properties and reduce competition between landlords and homebuyers.
When the policy was first introduced, investors purchasing an additional property were required to pay a 3% surcharge on top of the existing stamp duty rates. Over time, this additional cost increased further. In October 2024, the surcharge in England rose to 5%. Wales also now applies a 5% surcharge, while Scotland has taken a more aggressive approach, with the equivalent rate reaching 8%.
The changes were part of a broader strategy aimed at shifting the housing market in favour of owner-occupiers rather than investors. However, a decade later, new analysis suggests the long-term effects of these policies have been far more complex.
The Cost of Investing in Property
According to new research from lettings agency Hamptons, the surcharge has substantially increased the upfront costs associated with buying an investment property.
For example, an investor purchasing a buy-to-let property valued at £350,000 in England today would face a stamp duty bill of around £25,000. By comparison, someone moving home would pay approximately £7,500, while a first-time buyer would pay only £2,500.
This difference highlights how tax policy has deliberately tilted the market away from landlords and towards those purchasing homes to live in themselves.
Despite landlords now making up a smaller proportion of property buyers, they still generate a large share of stamp duty revenue. By the 2024/25 tax year, nearly half of all residential stamp duty receipts came from buyers paying the additional property surcharge.
A Decade Later: The Missing Rental Homes
One of the most striking findings from the analysis is the estimated number of rental homes that might have existed if the private rented sector had continued growing at the same pace it did before 2016.
Hamptons suggests that if earlier growth trends had continued, there could now be around 2.2 million more households renting privately across Great Britain. Instead, growth in the private rented sector has largely stalled.
Today, roughly 5.2 million households rent privately. If the sector had expanded at the same rate seen before the introduction of the surcharge, that figure could have reached around 7.4 million.
In percentage terms, about 18% of households now live in privately rented accommodation. Had earlier trends continued, that proportion might have been closer to 25.6%, a level more comparable with rental patterns seen decades ago.
Fewer Homes Available to Rent
The surcharge has achieved its original objective of reducing the number of properties purchased by investors. However, this has also had an impact on the availability of rental homes.
Alongside other factors such as tighter regulations and demographic shifts, fewer landlord purchases and an increase in landlords selling their properties have reduced the overall supply of rental housing.
According to the analysis, there were around 25.4% fewer homes available to rent in February 2026 compared with February 2016.
Investor Activity Declines
In the months leading up to the introduction of the original surcharge in 2016, many landlords rushed to purchase properties before the new tax came into force. During that period, investors accounted for 16.5% of all property purchases, above the five-year average of 14.5%.
However, in the decade since the surcharge was introduced, investor activity has steadily declined. On average, landlords have accounted for around 11.8% of property purchases during this time.
So far in 2026, that figure has dropped even further to 10.8%, following the increase in the surcharge from 3% to 5% in 2024.
The same pattern can be seen across several parts of Great Britain, where higher taxes have reduced investor appetite for purchasing rental properties.
Share of Homes Bought by an Investor
| Region | 12 months prior to the surcharge | 2026 | Change |
| London | 16.4% | 8.5% | -7.9% |
| South East | 15.1% | 10.5% | -4.6% |
| South West | 14.7% | 7.3% | -7.4% |
| East of England | 14.6% | 8.1% | -6.5% |
| East Midlands | 18.1% | 15.3% | -2.8% |
| West Midlands | 21.2% | 14.6% | -6.6% |
| North East | 23.3% | 29.2% | +5.9% |
| North West | 16.9% | 13.4% | -3.5% |
| Yorkshire & Humber | 15.7% | 13.8% | -1.9% |
| Scotland | 17.0% | 6.1% | -4.1% |
| Wales | 15.7% | 7.0% | -8.7% |
| Great Britain | 16.5% | 10.8% | -5.7% |
Wider Effects on the Housing Market
The reduction in investor activity has had several knock-on effects across the property sector.
For tenants, fewer rental properties mean increased competition and rising rents in many areas. At the same time, developers have also felt the impact. Buy-to-let investors often purchase properties off-plan, helping developers secure funding and reduce financial risk when starting new housing projects.
With fewer investors entering the market, some development projects may become harder to finance, which could ultimately affect the overall supply of new homes.
A Changing Private Rental Sector
Ten years after the introduction of the second home stamp duty surcharge, the private rented sector looks very different from what many predicted in 2016.
While the policy successfully reduced the number of homes purchased by landlords, it may also have contributed to a slower expansion of rental housing.
As demand for housing continues to grow alongside population increases, the challenge for policymakers will be balancing support for homeownership with ensuring there are enough rental homes available for those who need them.
The question now being asked across the property industry is simple: if the rental sector had continued growing at its earlier pace, where might those missing 2.2 million homes be today?
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