Stamp Duty holiday stimulated Buy-to-Let purchases in the South

Stamp Duty holiday stimulated Buy-to-Let purchases in the South

10:49 AM, 19th November 2021, About 2 years ago

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London, the South East and the South West led the jump in buy-to-let house purchases during the Stamp Duty holiday, analysis by Paragon Bank has revealed.

Comparing the period when landlords received the full 3% Stamp Duty discount – July 2020 to June 2021 – with the last comparative period not impacted by Covid – July 2018 to June 2019 – showed the number of buy-to-let purchases increased by 52% in London.

Paragon’s analysis of industry data showed the South East recorded a 49% increase in purchase completions, whilst the South West saw buy-to-let purchases rise by 41%.

At the other end of the scale, the West Midlands saw the smallest increase, with transactions rising by 12%, whilst Wales and Scotland, which had different housing stimulus measures, rose by 8% and 1% respectively.

The regions that saw the greatest increases were those where the Stamp Duty saving was greatest based on average house prices. Landlords could save up to £15,000 in Stamp Duty costs during the holiday period.

However, they were also the regions that saw the greatest falls in house purchases after the Stamp Duty 3% surcharge for buy-to-let and second homes was introduced in April 2016. Between 2015 – the last year before the surcharge was introduced – and 2019, buy-to-let purchases fell 55% in London and 51% in the South East, whilst the South West decreased 41%. Despite the Stamp Duty holiday, transactions during the July 2020 to June 2021 12-month period were still 30% below 2015 levels in London and 29% lower in the South East.

Region Stamp Duty holiday % increase vs July 18 – June 19 Proportion of BTL purchase (July 20 – June 21) July 20 – June 21 % decrease vs 2015
Greater London 52% 15.5% -30%
South East 49% 20% -29%
South West 41% 8.4% -17%
North East 29% 4.7% 6%
East Anglia 28% 3.8% -15%
East Midlands 24% 8.2% -4%
North West 17% 11.9% -7%
Yorkshire & Humber 17% 8% 8%
West Midlands 12% 9.6% 2%
Wales 8% 3.7% -5%
Scotland 1% 6% -13%

Paragon Bank Managing Director of Mortgages Richard Rowntree said: “The impact of the Stamp Duty saving on regions where house prices are generally higher is clear to see, with transactions in London and the South increasing by approximately half. There were also strong increases in the South West, North East and East Anglia.

“Despite this, tenant demand still outweighs supply in large swathes of the country, which is leading to record levels of rental inflation, plus transactions still remain significantly below the level experienced before the Stamp Duty surcharge was introduced in 2016. As the Government pursues its Levelling Up agenda, it needs all facets of the housing market to be working effectively, including a sufficiently sized private rented sector to facilitate labour market mobility and provide good quality homes for those who cannot or don’t want to own a home”

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