According to an analysis of UK Finance data by BTL lender Paragon, this was due to the stamp duty surcharge on additional properties, which was introduced in 2016.
This was a fall from a 39% share of BTL purchases in the South East, Greater London and the South West in 2022, and down from a high of 52% in 2015 – the year before the tax was brought in.
Since 2015, the share of BTL purchases in South England has steadily fallen year-on-year. This was excluding 2020 and 2021, when the stamp duty holiday was in place.
Looking at each region independently, the share of BTL-mortgaged purchases in Greater London fell from 19% in 2015 to 12% in 2023. Purchases in the South East declined by 24% to 17% over the same period, while in the South West, this reduced by 9% to 6%.
Most of the other recorded regions saw a growth in BTL-mortgaged purchases over that time period, such as the North West, where there was a jump from 9% to 14%, and Yorkshire and the Humber, where this rose from 6% to 10%.
East Anglia was the only region not in the South of England to see a decline in BTL purchases from 2015 to 2023, but this was only a small drop from 4% to 3%. Paragon said this was due to the East of England having higher-than-average house prices.
Disproportionate impact on certain markets
Richard Rowntree (pictured), managing director of mortgages at Paragon, 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 buy-to-let homes were purchased in the North West than in London during three of the past five years.
“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.”
He added: “We are seeing the private rental sector utilised by a broader range of people than ever before, and those who want or need to rent a home should expect to be able to choose from a range of fairly priced, decent-quality rental homes. Unless supply is boosted to meet forecast growth in demand, rents will only grow higher in markets with extreme supply/demand imbalances.”
