Second home purchases in London have fallen by 42% over the past year, with the decline even more pronounced across the prime market at 51%, according to research by Jefferies London.

Jefferies London analysed sold price records from the Land Registry, looking at transactions completed over the past year and the market split between primary purchases (Category A) and additional price paid entries including transfers under a power of sale/repossessions, buy-to-lets, and transfers to non-private individuals (Category B).

The research shows that across the UK’s Capital, transaction levels have fallen by 20.5% year-on-year, driven by a 41.6% decline in Category B purchases. As a result, over the past year, just 11.7% of all of London’s transactions were Category B purchases, compared with 15.9% over the 12 months prior.

This trend is even starker within the prime London market, where overall activity has dropped by 27% year-on-year. The fall has, again, been fuelled by a 51.4% decline in Category B transactions, which now account for just 9.1% of all prime market sales compared to 13.7% previously.

The decline in Category B purchases has been driven by a series of tax changes targeting additional property owners. In October 2024, the surcharge on second home Stamp Duty was increased from 3% to 5%, adding a significant upfront cost for second home buyers.

From April 2025, local councils also gained the power to charge a council tax premium on second homes, further increasing the annual cost of ownership. Alongside these measures, the government’s proposal to replace SDLT entirely with a new annual homeowner tax has created further uncertainty, threatening to erode the appeal of investing in London’s prime property market.

Further analysis by Jefferies London at postcode level shows that six prime postcodes have seen Category B purchases reduce to zero over the last year versus the previous 12 months. These include W1D (Marylebone, Fitzrovia and Soho), WC2H (Leicester Square and St Giles), WC2R (Somerset House and Temple West), WC1V (High Holborn), WC2N (Charing Cross), and SW1A (Mayfair and St James’s).

Beyond these outright falls, some of the largest reductions were recorded in WC1X (Kings Cross), where Category B transactions dropped by 94.6% year on year, WC1A (New Oxford Street), down 90.9%, W1G (Marylebone, Fitzrovia and Soho), down 90.9%, SE11 (Vauxhall, Nine Elms, Borough and Kennington), down 86.8%, and W1B (Marylebone, Fitzrovia and Soho), down 85.7%.

“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,” comments Damien Jefferies, founder of Jefferies London.

“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.”