New research reveals a sharp decline in second home purchases across the capital, with a 42% fall over the past 12 months. The drop is even more pronounced in prime central London, where second home transactions are down by 51% year-on-year.
The analysis, based on Land Registry sold price data, examined the breakdown of transactions into two categories:
Category A: Primary residential purchases.
Category B: Transactions classed as additional property purchases, including buy-to-lets, repossessions, transfers under power of sale, and sales to non-private individuals.
Across Greater London, overall transaction volumes fell by 20.5% year-on-year, largely driven by a 41.6% fall in Category B activity. Over the last year, only 11.7% of all London transactions were Category B, down from 15.9% in the previous 12 months.
In the prime London market, total transactions are down 27% year-on-year, with Category B purchases falling by 51.4%. These now make up just 9.1% of sales, compared to 13.7% the year before.
The sharp reduction in second home purchases follows a series of government tax changes targeting additional property owners:
In October 2024, the Stamp Duty surcharge on second homes increased from 3% to 5%, raising the upfront cost of buying an additional property.
From April 2025, local councils were granted powers to apply council tax premiums on second homes, increasing ongoing ownership costs.
Further uncertainty has been introduced by the government’s proposal to replace Stamp Duty with a new annual property tax, affecting investor sentiment, particularly in the prime market.
The postcode-level analysis carried out by Jefferies London found that six prime London postcodes recorded zero Category B sales in the last year, compared to the previous 12 months. These include:
W1D – Marylebone, Fitzrovia, and Soho
WC2H – Leicester Square and St Giles
WC2R – Somerset House and Temple
WC1V – High Holborn
WC2N – Charing Cross
SW1A – Mayfair and St James’s
Other areas experienced steep declines:
WC1X (Kings Cross) – down 94.6%
WC1A (New Oxford Street) – down 90.9%
W1G (Marylebone/Fitzrovia/Soho) – down 90.9%
SE11 (Vauxhall, Nine Elms, Borough, Kennington) – down 86.8%
W1B (Marylebone/Fitzrovia/Soho) – down 85.7%
Damien, founder of Jefferies London, commented: “The prime London market has long attracted international and domestic investors alike, but successive tax hikes on second homes have significantly dampened appetite and this has resulted in a contraction where sales volumes are concerned.
“Our research shows that second home purchases are down significantly across the London market and, where the prime London market is concerned, they’re now running at little more than half the level seen just a year ago.
“It remains to be seen where we go from here. On the one hand, the potential overhaul of stamp duty could act as a catalyst and drive buyer activity, however, introducing a new annual property tax targeting high-end homebuyers could risk deterring even more buyers.
“Policymakers must tread carefully if they want to ensure that London remains an attractive and competitive destination for global investment.”
Read the orginal article: https://propertyindustryeye.com/prime-london-second-home-sales-plunge-over-50/
