The 3% stamp duty surcharge introduced in 2016 has triggered a long-term shift in the buy-to-let market with landlords increasingly moving investment away from London and the South towards cheaper northern regions.
New analysis shows the tax change marked a turning point for landlord purchasing behaviour, accelerating a decade-long trend towards areas offering lower prices, higher yields and stronger investment returns.
In 2015, before the surcharge came into force, southern England accounted for almost 56% of all mortgaged buy-to-let purchases. By 2025 that had fallen to below 40%, with the Midlands and North now making up the majority of transactions.
The figures show how tax changes, tighter regulation and rising borrowing costs have reshaped the private rented sector, pushing investors towards regions where property remains more affordable and rental yields are higher.
BUY-TO-LET BOOST
Paragon Bank data shows the North West has become one of the biggest buy-to-let markets in the country, increasing its share of purchases from around 9% to nearly 14% over the past decade. Yorkshire has also grown strongly, rising from about 7% to just over 10%, while the North East has almost doubled its share.
Meanwhile, London and the South East have seen the sharpest declines. London’s share of buy-to-let purchases has dropped from around 18% to 12%, while the South East has fallen from more than 24% to below 16%. The South West has also lost ground.
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Louisa Sedgwick (main picture), Managing Director of Mortgages at Paragon Bank, says “The stamp duty surcharge was a defining moment for the buy-to-let market. Ten years on, the data shows a clear and lasting rebalancing, with the Midlands and North now accounting for a greater share of landlord purchases than the South.
“Landlords have become more commercially focused, and regions such as the North West and Yorkshire and the North have moved from being alternative locations to core buy-to-let markets, while higher-priced southern regions have seen their relative importance decline.
“The long-term decline in investment into London and the South East could be storing up problems for future renters and exacerbate the supply demand imbalance issue that has affected these markets in recent years.”
