Buy-to-let borrowing has shifted decisively towards the Midlands and the North since the introduction of the Stamp Duty surcharge in April 2016, according to analysis from Paragon Bank.
The bank said the extra 3% tax on second homes marked a turning point for the market, with landlords increasingly moving away from higher-value southern markets and towards regions where investment economics are more favourable.
Its analysis of mortgaged buy-to-let house purchase volumes shows that, in 2015, the year before the surcharge came into force, the South accounted for nearly 56% of all financed buy-to-let house purchases. The Midlands and North, by contrast, represented just under 35%.
By 2025, that picture had reversed. The Midlands and North accounted for just over half of all buy-to-let purchase volumes, while the South’s share had fallen to 38%.
The figures point to a marked regional rebalancing over the past decade. The North West has emerged as the second largest regional market for buy-to-let purchases, increasing its share to 13.76% in 2025 from 8.92% in 2015. Yorkshire and Humberside also recorded a notable rise, climbing to 10.16% from 6.49%, while the North East increased to 6.88% from 3.9%.
The West Midlands grew to 10.6% from 8.19%, and the East Midlands rose to 8.79% from 7.45%. Scotland and Wales also posted modest gains over the period.
By contrast, southern regions lost ground. Greater London’s share of mortgaged buy-to-let house purchases fell to 12.28% in 2025 from 19.03% in 2015. The South East saw an even steeper decline, dropping to 15.91% from 24.09%, while the South West slipped to 6.44% from 8.66%.
Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “The Stamp Duty surcharge was a defining moment for the buy-to-let market. 10 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.
“Landlords have become more commercially focused, and regions such as the North West and Yorkshire and the North have moved from being alternative locations to core buy-to-let markets, while higher-priced southern regions have seen their relative importance decline.”
She warned: “The long-term decline in investment into London and the South East could be storing up problems for future renters and exacerbate the supply demand imbalance issue that has affected these markets in recent years.
“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.”
The data suggests the surcharge did more than raise transaction costs for landlords. Over time, it appears to have accelerated a redistribution of investor demand, with buyers showing a greater willingness to pursue lower-priced markets offering stronger yields and lower barriers to entry.
