Paragon, which analysed industry data, said the East and West Midlands, the North West, the North East and Yorkshire and the Humber accounted for 47.4% of new buy-to-let (BTL) purchases with a mortgage in the first six months of the year by volume.
This is an increase from 46% during the first half of the year, and an increase from 33.5% a decade ago.
The lender said landlords are increasingly focusing on markets in the Midlands and the North, as property prices are lower, leading to higher yields and lowered acquisition costs.
The trend has been accelerated following the introduction of the stamp duty surcharge in April 2016.
The South East made up 15.4% of purchases, but the North West was the second-largest market for BTL mortgaged purchases, making up 12.9% of acquisitions. This was followed by Yorkshire and the Humber at 9.5%.
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The report noted that London and the South East have fallen in popularity, going from 41.6% in H1 2015 to 27.6% this year, and the South West has declined from 6%.
Wales and Scotland have stayed broadly stable over the past decade, with Wales making up 3.5% of purchases and Scotland accounting for 6.8% of deals.
Louisa Sedgwick, Paragon Bank’s managing director of mortgages, said: “The trend towards investment across Midlands and Northern markets increased following the introduction of the stamp duty surcharge nearly a decade ago.
“These markets are appealing to landlords for several reasons, including the availability of appropriate stock, strong tenant demand, healthy local economies, lower purchase costs and generally stronger yields.”
She added: “The South East and London are still the UK’s most important rental markets, however, given the transient nature of these markets and their economic importance. Stifled new supply against heightened tenant demand has driven rental inflation. Without an increase in new stock across the South East, and in particular London, tenant choice is diminished.”
