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Insights

Regional trends in buy-to-let lending

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Boris Johnson and his Government were elected on a clear promise to ‘level up’ the UK, achieving balance between the economic powerhouse of London and the South East with the rest of the country – but, inevitably, the coronavirus crisis has impacted the Prime Minister’s strategy.  

Our report examines some of the recent lending trends across the UK and how changes to Stamp Duty – initially with the introduction of the 3% buy-to-let surcharge and more recently the Stamp Duty holiday – have impacted lending in the regions.  

We also look at landlord sentiment across the regions; what they are feeling, their investment intentions and how tenant demand is changing.  

Historically, London and the South East, as well as the East and South West, have seen higher volumes of buy-to-let investment. However, these areas have already been more acutely impacted by a combination of tax changes and Brexit than those regions in the Midlands and North.  

With an ongoing challenge of supply being unable to meet demand, ‘levelling up’ the UK might in fact create additional imbalance in the private rented sector (PRS), leading to greater rental inflation.  

Download our report on regional trends in the buy-to-let market.

Whilst some renters are making a move, at the same time, a mixture of affordability constraints and  

reluctance to make larger investment decisions during the pandemic, means the typical flow of renters out of the sector is not happening at the usual pace, putting more pressure on supply.  

At the same time, despite a temporary surge in transactions following the Stamp Duty holiday, investment into the PRS has not regained the levels seen in 2015 before the additional Stamp Duty was introduced for investors, as this report highlights.  

It’s clear that economies across the UK will benefit from an injection of investment as the Government attempts to jumpstart the economy following the coronavirus pandemic. Combine that with societal and demographic changes that were already well underway – such as the growth in single person households – and the PRS will have a vital role to play in meeting the country’s housing needs. 

The Government has made clear that the growth of one area of the country will not be at the expense of another. The need for good quality, private rented stock is required throughout the country to help the Government achieve its aims.  

The PRS is a fluid, reactive sector, fuelled by landlords’ ability to quickly adapt to changes in market demand. But in order to do so, they require adequate funding, a fair tax system and a regulatory environment that fosters investment.  

It’s imperative that Government considers that as it develops its plans for the levelling up agenda in order to maintain growing optimism in a resilient but challenged buy-to-let market. 

Richard Rowntree  
Managing Director of Mortgages 
Paragon Bank 

Download the report