The proportion of buy-to-let properties purchased in Southern England dropped to a record low in 2023, continuing a downward trend since the introduction of the Stamp Duty surcharge for additional properties in 2016.
Paragon Bank’s analysis of industry data indicates that only 35% of properties bought with a buy-to-let mortgage last year were in the South East, Greater London, and the South West, a significant decrease from 52% in 2015.
Richard Rowntree, managing director of mortgages at Paragon Bank, commented on the impact: “The introduction of the Stamp Duty surcharge disproportionately impacted those markets with above average house prices in the south of England.
“For example, compared to 2015, the number of homes purchased with a buy-to-let mortgage was 70% lower last year, and a greater number of buy-to-let homes were purchased in the North West than in London during three of the past five years.”
The shift in buy-to-let investments has been notable, with the proportion of homes purchased in regions like the North West and Yorkshire & Humber increasing significantly since 2015.
Conversely, areas traditionally popular for such investments, including Greater London, the South East, and the South West, have seen substantial declines.
Rowntree added: “Over the long-term, it’s clear that we will need more rental homes and a vibrant private rented sector across the UK.
“With the population forecast to increase by 9.9% – or by 6.6 million people – by 2036, demand for rental property is only going to be stronger.
“That is particularly true of areas in the South of the country, particularly London where the transient population means that a strong supply of rental homes is vital.”
He also noted: “We are seeing the PRS utilised by a broader range of people than ever before and those who want or need to rent a home should expect to be able to choose from a range of fairly priced, decent quality rental homes.
“Unless supply is boosted to meet forecast growth in demand, rents will only grow higher in markets with extreme supply/demand imbalances.”
