Stamp Duty One Year On: The Dust Has Settled
The frantic Q1 2025 rush to beat the stamp duty deadline pulled forward an estimated 50,000–80,000 transactions. The predictable hangover followed: Q2 2025 saw transaction volumes fall sharply before gradually recovering through the second half of the year. By Q4 2025, monthly completions had returned to roughly normal seasonal levels.
The lasting impact is a structural increase in the effective cost of buying. First-time buyers purchasing between £300,000 and £500,000 now pay £5,000–£10,000 in stamp duty that they would not have paid under the temporary relief. This has not stopped people buying, but it has shifted budget calculations — particularly in the South East and London where average prices sit firmly above the new thresholds.
The additional property surcharge at 5% (up from 3% pre-October 2024) continues to suppress buy-to-let purchases. Landlord acquisitions are at their lowest level since records began, accelerating the shift of rental stock from individual landlords to build-to-rent institutional investors.
Mortgage Rates: The Slow Descent Continues
The Bank of England base rate sits at 3.75% as of July 2026, held again at the June meeting, with the next decision due on 30 July. The pace of easing has been deliberately cautious, with the MPC citing persistent services inflation and wage growth as reasons not to move faster.
The cheapest two-year fixed rates now start around 4.2–4.5% for borrowers with larger deposits (60–75% LTV), with the best five-year fixes at a similar 4.3–4.6%. Market-wide averages across all deposit sizes sit closer to 5.5%, so the rate you're quoted depends heavily on your loan-to-value. A price war among lenders through the early summer has pushed best-buy rates down steadily. However, rates remain well above the 1.5–2.5% range that prevailed before 2022, and the market has largely accepted that sub-3% fixed rates are unlikely to return soon.
| Product | Typical best-buy rate (July 2026) |
|---|---|
| 2-year fix (60–75% LTV) | 4.2–4.5% |
| 5-year fix (60–75% LTV) | 4.3–4.6% |
| 5-year fix (90% LTV) | 4.6–5.0% |
| Bank of England base rate | 3.75% |
Regional Price Performance
The North-South divergence that defined 2024–25 has persisted, though headline growth is more modest than the boom-era numbers suggest. ONS figures for the 12 months to April 2026 put UK-wide growth at 3.8% (average price £270,000). The North West remains the top-performing English region at 3.9% annual growth, driven by relative affordability, improved transport links, and growing employer presence outside London.
The south is lagging: London managed a modest 1.6% annual rise — the strongest southern region — while the South East actually slipped into negative territory at −0.3%. The stamp duty burden is disproportionately felt in these higher-price regions, and affordability ratios remain stretched despite falling mortgage rates.
| Area | Annual Price Change (to Apr 2026, ONS) | Avg. House Price |
|---|---|---|
| UK | +3.8% | £270,000 |
| England | +3.9% | £291,000 |
| Wales | +3.5% | £212,000 |
| Scotland | +2.8% | £192,000 |
| North West (top English region) | +3.9% | — |
| London | +1.6% | — |
| South East | −0.3% | — |
Rental Market and Outlook
The structural rental supply shortage shows no sign of resolving, but rent growth has cooled markedly. Landlord exits have continued, with the 5% additional property surcharge and the now-enacted Renters' Rights Act (which received Royal Assent in late 2025) cited as contributing factors. Average asking rents outside London reached a record £1,397/month in Q2 2026 (Rightmove), but that is just 2.3% higher than a year earlier — a sharp slowdown from the ~7% annual increases of 2023–24, as affordability limits what tenants can pay.
The Renters' Rights Act has abolished Section 21 no-fault evictions and introduced a national landlord register, but the practical enforcement mechanisms are still being rolled out. The long-predicted exodus of small landlords has been gradual rather than sudden, but cumulative — and the new supply being added through build-to-rent schemes is concentrated in major cities, leaving smaller towns underserved.
Looking ahead, the consensus among forecasters is for continued modest price growth nationally (3–5%) through 2026, supported by falling mortgage rates and resilient employment. The risk factors are a global economic slowdown, stickier-than-expected inflation prompting the Bank of England to pause cuts, or a significant rise in unemployment. None of these is the central case, but all are plausible.
Key Takeaways
- ✓Transaction volumes have normalised after the Q1 2025 stamp duty rush — the market has absorbed the change
- ✓Base rate is 3.75% and best-buy 2-year fixes start around 4.2–4.5% at lower LTVs (July 2026)
- ✓The North West leads price growth at +3.9%; London manages +1.6% and the South East is slightly negative
- ✓Rent growth has cooled sharply — asking rents outside London are at a record £1,397/month but only +2.3% year-on-year
- ✓UK prices rose 3.8% in the year to April 2026 — in line with the consensus 3–5% outlook for the year