New Season, New Rules: How the 2025 Stamp Duty Changes Are Shaping PCL

Pre-Deadline Surge Followed by an Adjustment Period

March 2025 witnessed a notable surge in transactions across PCL as the last buyers rushed to complete purchases before the new SDLT rates took effect. Transactions increased by 17% year-on-year, with strong activity in sub-£2 million properties where SDLT savings were most significant. In contrast, Q1 transactions above £2 million fell by 6%, suggesting super-prime buyers were less influenced by the smaller tax saving.

SDLT Impact Across Prime Central London

The new SDLT structure-which halved the nil-rate band to £125,000 and increased surcharges for second homes and overseas buyers-has definitely affected PCL neighbourhoods differently. Christian Lock-Necrews, Director of Winkworth Knightsbridge & Chelsea, notes: "There is evidently a noticeable difference in activity as a result of the further SDLT on second homes with a now 5% rate, plus an additional 2% for overseas purchasers."

While ultra-high-net-worth individuals continue to transact, they're doing so at reduced volumes and primarily for "needs-based" purchases. Meanwhile, domestic buyer demand has remained relatively resilient in areas within our PCL patch such as Kensington and Notting Hill, driven by lifestyle factors rather than tax considerations.

Impact on the Rental Market

With more landlords proven to be exiting the market in response to increased taxation, rental supply in prime London is tightening significantly for the ever-increasing, bread and butter clientele, of young wealthy professionals enjoying the prime life without being bogged down:

• 10% decrease in new lettings listings year-on-year

• PCL rents increased by over 6% in Q1 2025-the fastest pace since late 2023

For investors still in the market, these conditions present opportunities for stronger rental yields, potentially offsetting higher acquisition costs.

Market Outlook: Spring Reset

After the pre-deadline rush, the market is now in what we consider a reset phase. For sellers, realistic pricing is essential. Christian notes: "Sellers need to price sensibly, often gauging where the market may move to. But buyers are back. The market's adjusting, and so are expectations."

For buyers, current conditions offer opportunity – especially for those who recognise the long-term value of London's prime postcodes during this period of adjustment. With new SDLT rates now in effect, our Prime London Stamp Duty Calculator is the easiest way to check your purchase costs – especially for higher-value or second-home properties.

Sources: Winkworth Research, Lonres, ONS, HMRC SDLT Changes