Southern England loses BTL dominance as Stamp Duty takes its toll

Southern England loses BTL dominance as Stamp Duty takes its toll

0:03 AM, 30th April 2024, About 3 months ago

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The buy to let market in Southern England has hit a significant milestone, with the proportion of investment properties purchased in the region reaching a record low in 2023, Paragon Bank reveals.

It says the trend is down to the Stamp Duty surcharge being introduced for additional properties in 2016.

Paragon’s research reveals that only 35% of properties purchased with buy to let mortgages last year were located in the South East, Greater London and the South West.

This represents a significant drop from 52% in 2015, the year before the Stamp Duty change.

Stamp Duty surcharge disproportionately impacted southern markets

Paragon’s managing director of mortgages, Richard Rowntree, said: “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 BTL homes were purchased in the North West than in London during three of the past five years.”

He 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.”

BTL purchases in Southern regions have steadily declined

The data highlights that the share of buy to let purchases in Southern regions has steadily declined, with only the temporary boost from the pandemic-era ‘Stamp Duty Holiday’ interrupting the trend.

London has seen the most dramatic drop with its share of mortgaged BTL purchases falling from 19% in 2015 to just 12% last year.

Similar declines were seen in the South East (24% to 17%) and the South West (9% to 6%).

Meanwhile, regions like the North West and Yorkshire and Humber have experienced significant growth in buy to let activity.

The North West’s share has risen from 9% to 14%, while Yorkshire and Humber saw an increase from 6% to 10% of the national BTL market.

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