Buy-to-let property investment has undergone a significant geographical shift over the past decade, with the Midlands and North now accounting for a larger share of purchases than the South, according to data from Paragon Bank.
Analysis of UK Finance lender data shows that in 2015, the year before the introduction of the stamp duty surcharge on second properties, the South accounted for almost 56% of all mortgaged buy-to-let purchases. The Midlands and North represented just under 35%.
By 2025, this position had reversed. The Midlands and North now represent just over half of buy-to-let purchase volumes, while the South’s share has declined to 38%.
Regional breakdown
The North West has experienced the largest regional shift, with the proportion of mortgaged buy-to-let house purchases increasing from 8.92% in 2015 to 13.76% in 2025 – a rise of 4.84 percentage points. Yorkshire and Humberside recorded a 3.67 percentage point increase over the same period.
Paragon Bank attributes the shift to the stamp duty surcharge on second properties, which was introduced on 1 April 2016. The surcharge was initially set at an additional 3% on top of existing stamp duty rates in England, before being increased to 5% in October 2024. Wales applies a 5% surcharge, while Scotland’s equivalent rate stands at 8%.
The impact of the surcharge is more pronounced in the South, where property values are typically higher, resulting in larger absolute tax payments.
Market implications
Louisa Sedgwick, Managing Director of Mortgages at Paragon Bank, said: “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.”
Sedgwick noted that landlords have become more commercially focused, with regions such as the North West and Yorkshire moving from alternative locations to core buy-to-let markets.
However, she cautioned that the long-term decline in investment into London and the South East could create supply issues. “If projected population growth is anywhere near accurate, we will need greater levels of supply for these transient and economically important rental markets. Without it, tenants could face rising rental inflation and reduced levels of choice,” she said.
Outlook
The data suggests the stamp duty surcharge has fundamentally altered the geography of buy-to-let investment in the UK. With the surcharge now at its highest level since introduction, the trend towards northern investment appears likely to continue, potentially creating supply challenges in high-demand southern markets.
