"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."
- Damien Jefferies - Jefferies James
Second home purchases in London have fallen sharply over the past year, with activity in the prime market down by more than half, according to new research from Jefferies London.
The analysis shows that across the capital as a whole, second home transactions dropped by 42% in the past 12 months. Within the prime market, the decline was more severe at 51%.
Jefferies London examined sold price data from the Land Registry, splitting transactions into Category A sales, representing primary purchases, and Category B, covering additional Price Paid entries. These included repossessions, buy-to-let purchases, transfers under a power of sale, and transfers to non-private individuals.
Across London, total transaction levels declined by 20.5% year on year. This was largely due to a 41.6% fall in Category B purchases. In turn, Category B transactions represented just 11.7% of all London activity in the past year, down from 15.9% the year before.
In the prime market, overall activity fell by 27%. The change was again led by a sharp drop in Category B purchases, down 51.4%. These now account for 9.1% of sales, compared with 13.7% previously.
The downturn has been attributed to tax reforms targeting second home ownership. In October 2024, the Stamp Duty surcharge on second homes rose from 3% to 5%, adding to upfront acquisition costs. From April 2025, local councils gained powers to levy a council tax premium on second homes, increasing ongoing ownership costs. In addition, government proposals to replace stamp duty with an annual homeowners tax have created further uncertainty.
Jefferies London’s postcode-level research highlighted six areas of prime London where Category B transactions fell to zero compared with the previous 12 months. These included:
W1D (Marylebone, Fitzrovia and Soho)
WC2H (Leicester Square and St Giles)
WC2R (Somerset House and Temple West)
WC1V (High Holborn)
WC2N (Charing Cross)
SW1A (Mayfair and St James’s)
Some of the steepest declines were seen in WC1X (Kings Cross), where Category B sales fell by 94.6% year on year, WC1A (New Oxford Street) and W1G (Marylebone, Fitzrovia and Soho), both 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,” said Damien Jeffries, 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."
“Policymakers must tread carefully if they want to ensure that London remains an attractive and competitive destination for global investment.”
