Buy to let investment booms in the Midlands and North – Paragon

Landlords investing in rental property has shifted decisively towards the Midlands and northern regions, according to Paragon Bank.

Data from the lender shows that landlords secured nearly half of new buy to let purchases with mortgages in the East and West Midlands, North West, North East and Yorkshire and Humber.

That’s for the first half of the year with these areas accounting for 47.4% of transactions, up from 46% in the same period last year and just 33.5% 10 years ago.

Landlord investors move north

The bank’s managing director of mortgages, Louisa Sedgwick, said: “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.”

She added: “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.”

Regional BTL investment split

The North West has become the country’s second largest market for mortgaged acquisitions, with 12.9% of purchases, placing it just behind the South East at 15.4%.

Yorkshire and the Humber also recorded its highest share to date at 9.5%. London has fallen back to third place, contributing 12% of deals, while the South West slipped to 6%.

The proportion of purchases in London and the South East has dropped sharply from a peak of 41.6% in 2015 to 27.6% this year.

Meanwhile, activity in Wales and Scotland has remained steady.

Wales accounted for 3.5% of purchases compared with 3.2% in 2015, while Scotland represented 6.8%, up from 6% a decade ago.

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