The North-South divide has hit buy-to-let, new research from Paragon Bank has revealed.

The lender suggested that there has been a significant shift towards more property purchases by landlords in the North during the past 10 years.

It attributed the shift to the Stamp Duty surcharge, which was introduced a decade ago.

In 2015, the year before the surcharge was introduced, the South accounted for almost 56% of all mortgaged buy-to-let house purchases. It compared to just under 35% across the Midlands and the North, it said.

However, by 2025, that position had reversed, with the Midlands and North representing just over half of buy-to-let purchase volumes, while the South’s share dropped to 38%. Its findings are based on lender data from UK Finance.

Regional variations

The biggest regional shift has taken place in the North West, with the proportion of mortgaged buy-to-let house purchases increasing from 8.92% in 2015 to 13.76% a decade later. This is an increase of at 4.84%.

It is followed by Yorkshire and Humberside, which has seen a 3.67% increase in investor purchases during this period.

Paragon Bank attributed the shift in purchases from the South to the North due to the introduction of the stamp duty surcharge.

The charge can be significantly more in the South, where property values tend to be higher.

The Stamp Duty surcharge was a defining moment for the buy-to-let market.”

Louisa Sedgwick, Managing Director of Mortgages at Paragon Bank, said: “The Stamp Duty surcharge was a defining moment for the buy-to-let market. Ten 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 went on to add a word of caution, saying: “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.”

Stamp Duty surcharge

The Stamp Duty surcharge on second properties was introduced 10 years ago on 1 April 2016.

The surcharge The surcharge marked a shift between the tax treatment of owner-occupiers and investors, making it more expensive to buy additional properties.

The surcharge was initially set at an extra 3% on top of existing stamp duty rates in England, before being later increased to 5% in October 2024.

There is a similar 5% surcharge in Wales, while in Scotland, the equivalent rate is now 8%.

Pictured: Paragon Bank’s Louisa Sedgwick