The prime London markets driving second home market activity

Posted on Monday, June 3, 2024

Stamp Duty data covering 2022/23 revealed that almost half of all residential purchases across Westminster were for second homes. 

The latest research from London lettings and estate agent, Benham and Reeves, has shown that while second home purchases account for 23% of total market activity across England, this climbs to as high as 49% in the nation’s second home hotspots.

Benham and Reeves analysed the latest government figures on stamp duty receipts for residential purchases, looking at the market split between those received via primary property purchases versus those that came via purchases paying the higher rate.

The higher rate of stamp duty is applied to purchases of additional dwellings such as second homes or buy-to-let purchases.

The figures show that annually (2022/23), the government registered just over one million residential transactions via stamp duty receipts. 233,800 of these came via second home purchases, meaning that these additional purchases accounted for 23% of total market activity.

Regionally, the North East saw the largest level of second-home buyer activity, with 27% of all stamp duty receipts received being attributed to second-home purchases. London and the North West ranked second (27%), while the South West was home to the lowest proportion of second home purchases at 19%.

At the local authority level, the prime London markets of Westminster and Kensington and Chelsea top the table. Across Westminster, 49% of all residential purchases were for second homes, while in Kensington and Chelsea, they accounted for 46% of total market activity.

Camden also makes the top 10 where 36% of all homes purchased annually were second homes.

However, while these are likely to be largely attributed to high-end homebuyers, particularly foreign buyers, it’s the buy-to-let market that is largely driving second home market activity elsewhere across the nation.

In Liverpool, 40% of all residential purchases in 2022/23 were second homes, with Burnley (36%), Middlesbrough (36%), Manchester (36%), Slough (35%), Enfield (35%) and Nottingham (35%) also making the top 10.

Director of Benham and Reeves, Marc von Grundherr, commented: “Despite the government’s best efforts to deter second home purchases, particularly by buy-to-let investors, we’re still seeing a high proportion of market activity come as a result of second home buyers.

"While this is no doubt due to high-end buyers across the prime London market, other areas are more likely to have been driven by landlords who continue to see the rental market as a profitable one, even if their margins have been dampened in recent years.”

Via @PropertyReporter