Buy-to-let investment has fundamentally shifted from southern England to the Midlands and North over the decade since the stamp duty surcharge was introduced, with new data showing the South’s share of landlord purchases has fallen from 56 percent to just 38 percent.
Figures from Paragon Bank mark the 10-year anniversary of the 3 percent stamp duty surcharge that took effect in April 2016, revealing a complete reversal in where landlords choose to invest. The Midlands and North now account for more than half of all mortgaged buy-to-let house purchases.
London and South East see sharpest declines
London’s share of buy-to-let purchases has dropped from 18 percent in 2015 to just 12 percent in 2025. The South East declined from 23 percent to 16 percent, while the South West fell from 9 percent to 6 percent.
Louisa Sedgwick, managing director of mortgages at Paragon Bank, said the surcharge’s introduction was “a defining moment” for the sector.
“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,” Sedgwick said.
“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.”
The North West of England has shown the biggest growth in buy-to-let activity, up nearly 5 percentage points over the decade, while the South has seen the largest decline at over 8 percentage points.
Policy delivers intended outcome but raises supply concerns
The shift follows analysis from Hamptons lettings suggesting the stamp duty surcharge has led to significantly fewer privately renting households in the UK than would otherwise have been expected. Hamptons data shows first-time buyers now face less competition from landlords when purchasing property.
Aneisha Beveridge, head of research at Hamptons, said the policy had “broadly delivered what the government of the day set out to achieve” – reducing competition for first-time buyers.
However, Sedgwick warned that 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,” she added.
This follows Landlord Knowledge’s March report on the shrinking private rental sector, which found the sector had contracted by £48bn as landlords exited the market.
What this means for landlords
- If you are expanding: Northern regions now offer better yields and lower stamp duty bills – the commercial logic is clear for portfolio growth.
- If you own in the South: Capital values may be higher but rental returns lag northern markets – consider whether your portfolio allocation still makes sense.
- Watch for: Increasing rental supply pressure in London and the South East as fewer landlords enter these markets – existing landlords may see reduced void periods but should prepare for political scrutiny.
- Bottom line: The stamp duty surcharge has permanently reshaped where buy-to-let investment flows – landlords who adapted early have benefited from stronger yields.
Editor’s view
A decade of higher stamp duty has done exactly what was intended – reduced landlord purchases in expensive areas. The unintended consequence is a rental supply shortage in the places people most want to live. Policymakers may soon discover that taxing landlords out of London created more problems than it solved.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 26 March 2026
Sources: Paragon Bank, Hamptons
Related reading: Outer London rental stock falls to just 15% in worst-hit boroughs
