UK Property Market Review: Stamp Duty Changes & Trends in 2025

UK Property Market Outlook: Regional Cities Set to Outperform London in the Coming Years

Recent figures reveal that the UK property market continues to display resilience, with landlords maintaining steady activity levels despite increased costs introduced in the recent Autumn Budget. The data demonstrates strong investor confidence, particularly in regions outside London, where rental yields and property affordability offer significant opportunities for growth.

Landlord Activity Holds Steady

In November 2024, landlords accounted for 10.7% of homes sold in Great Britain, slightly above the 2024 average of 10.2%. This marks a noteworthy rebound from the sharp drop in investor activity seen after the 2022 mini-budget. Landlords are adapting to the higher Stamp Duty surcharge, which increased from 3% to 5% for second-home purchases. For example, investors now pay £17,500 in Stamp Duty on a £300,000 property, a significant increase from previous rates.

Despite these rising costs, landlords remain undeterred, particularly in Northern England, where lower property prices and high rental yields mitigate the impact of higher taxes.

Regional Shift: Opportunities in Northern England

The introduction of higher Stamp Duty rates has accelerated a trend of investors gravitating towards Northern England. The North East, for example, saw landlords purchase 18.4% of all homes sold in November, surpassing pre-2016 levels when the original surcharge was introduced. With an average property price of £115,000 and gross yields of 9.7%, the North East offers landlords an attractive investment proposition compared to London, where yields average 5.7%.

This regional shift also reflects a growing number of Southern-based investors seeking better returns in the North. In 2024, 30% of buy-to-let purchases in Northern England were made by landlords based in the South, a figure that has steadily increased over recent years.

Stamp Duty Revenue and Market Resilience

The government has reaped substantial revenue from the Stamp Duty surcharge since its introduction in 2016, raising up to three times the initially projected amount. The recent increase to 5% is expected to generate an additional £400 million annually, underlining the market's resilience. Investors in regions such as the Midlands and Northern England, where lower property prices reduce the financial burden, continue to see buy-to-let as a viable investment option.

Rental Market Trends

While rental growth has slowed to 2.6% year-on-year, marking the lowest rate in four years, the market remains robust. Northern England and Scotland lead the way, with rents rising by 5.7% and 7.2%, respectively, over the past 12 months. In contrast, London rents increased by just 0.4%, reflecting the growing affordability pressures in the capital.

The availability of rental homes has also improved, with stock levels now 13% higher than November 2023, easing some of the pressure on rental prices. However, demand remains elevated, especially in regions where supply is still constrained, providing consistent opportunities for landlords.

Key Figures at a Glance

A Positive Outlook for UK Property Investors

Keith Egan, Managing Director of Magnate Assets, shares an optimistic perspective:
“Despite the increased Stamp Duty rates, the UK property market continues to show resilience. Regional cities in Northern England and the Midlands offer exceptional value for investors, with high rental yields and lower entry costs. For overseas investors, this is a golden opportunity to diversify portfolios and capitalize on the strong demand for rental properties in these regions.

"As interest rates begin to ease in 2025, we expect further stabilization and growth, making the UK property market an even more attractive investment destination."

Looking Ahead

As 2025 approaches, the UK property market remains a promising avenue for investors, particularly in regions outside London. With robust rental yields, growing demand, and easing interest rates, opportunities abound for those looking to secure strong returns.

At Magnate Assets, we specialize in helping investors navigate the UK property market and identify the best opportunities. Contact us today to explore how you can take advantage of these market trends.