Buy-to-let lending in the Midlands and the north of England accounted for nearly half of all mortgaged purchases in the first half of the year, reflecting a structural shift in landlord investment patterns away from London and the South East.
Analysis by Paragon Bank shows that the East and West Midlands, North West, North East and Yorkshire and the Humber represented 47.4% of acquisitions in the six months to June. That compares with 46% a year earlier and just 33.5% a decade ago.
The figures underline how investors have increasingly targeted regional markets where lower entry costs and stronger rental yields provide a more attractive return.
The move gained momentum following the introduction of the Stamp Duty surcharge on additional homes in 2016.
REGIONAL VARIATIONS
The North West has now emerged as the second-largest market, accounting for 12.9% of buy-to-let purchases in the first half of the year. Yorkshire and the Humber reached a record 9.5%, up from 9.2% in the same period last year.
By contrast, the South East remained the single largest regional market at 15.4%, but London has slipped further behind. The capital contributed just 12% of acquisitions, continuing its decline since being overtaken by the North West in 2019. Together, London and the South East made up 27.6% of purchases, sharply down from a peak of 41.6% in the first half of 2015.
The South West also lost ground, edging down to 6% from 6.2% a year earlier. Activity in Wales and Scotland has remained relatively stable over the past decade, with Wales at 3.5% and Scotland at 6.8%.
GEOGRAPHICAL REALIGNMENT
Louisa Sedgwick, managing director of mortgages at Paragon Bank, says: “The trend towards investment across Midlands and northern markets increased following the introduction of the Stamp Duty surcharge nearly a decade ago.
“These markets are appealing to landlords for several reasons, including the availability of appropriate stock, strong tenant demand, healthy local economies, lower purchase costs and generally stronger yields.”
And she adds: “The South East and London are still the UK’s most important rental markets, however, given the transient nature of these markets and their economic importance. Stifled new supply against heightened tenant demand has driven rental inflation.
“Without an increase in new stock across the South East, and in particular London, tenant choice is diminished.”
