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 approximately 4.0% in March 2026, down from 4.5% a year ago after three further 0.25% cuts. The pace of easing has been deliberately cautious, with the MPC citing persistent services inflation and wage growth as reasons not to move faster.
Two-year fixed rates for 75% LTV borrowers have fallen to around 3.8–4.2%, with five-year fixes at 3.6–4.0%. This is a meaningful improvement from 2024 levels and has boosted affordability — a buyer on a £250,000 mortgage pays roughly £100–£150 less per month than they would have a year ago. 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 | March 2025 | March 2026 | Change |
|---|---|---|---|
| 2-year fix (75% LTV) | 4.4–4.7% | 3.8–4.2% | Down ~0.5% |
| 5-year fix (75% LTV) | 4.1–4.4% | 3.6–4.0% | Down ~0.5% |
| 2-year fix (90% LTV) | 5.0–5.4% | 4.4–4.8% | Down ~0.6% |
| Bank of England base rate | 4.50% | ~4.00% | Down 0.50% |
Want AI analysis on a specific property?
Paste any Rightmove or Zoopla listing into HomeThink for instant red flags, valuation, and neighbourhood data.
Try free — 3 credits, no cardRegional Price Performance
The North-South divergence that defined 2024–25 has persisted. Northern England — led by the North West and Yorkshire — continues to see the strongest annual price growth, driven by relative affordability, improved transport links, and growing employer presence outside London. Manchester, Leeds, and Sheffield postcodes have seen 5–7% annual growth.
London and the South East have returned to modest positive territory after a flat 2025, but growth is running at 1–3% — barely keeping pace with inflation. The stamp duty burden is disproportionately felt in these higher-price regions, and affordability ratios remain stretched despite falling mortgage rates. The East of England and South West sit somewhere in between, with growth around 3–5%.
| Region | Annual Price Change (Mar 2026) | Avg. House Price |
|---|---|---|
| North West | +6.5% | £240,000 |
| Yorkshire & Humber | +5.9% | £222,000 |
| East Midlands | +4.8% | £267,000 |
| South West | +4.1% | £344,000 |
| South East | +2.6% | £421,000 |
| London | +1.9% | £540,000 |
Rental Market and Outlook
The structural rental supply shortage shows no sign of resolving. 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 have risen to approximately £1,430/month, an increase of around 7% year-on-year — broadly in line with the 2024–25 trend.
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
- ✓Mortgage rates have fallen roughly 0.5% year-on-year, with 2-year fixes now around 3.8–4.2% at 75% LTV
- ✓Northern England continues to outperform with 5–7% price growth; London and South East trail at 1–3%
- ✓Rental supply remains structurally tight — average rents outside London are up ~7% year-on-year
- ✓Consensus outlook is 3–5% national price growth in 2026, supported by rate cuts and employment