BTL purchases rose significantly in London, the South East and the South West during the stamp duty holiday according to analysis by Paragon Bank.
Its findings said sales in these regions drove activity in the BTL market. Paragon’s data looked at BTL sales between July 2020 and June 2021, when landlords received the full 3 per cent stamp duty discount. These figures were compared to sales over the comparative period the previous year.
During this period London BTL sales were up by 52 per cent, BTL sales in the South East were up by 49 per cent, and in the South West there was a 41 per cent rise in BTL purchases.
However, not all regions enjoyed the same turbo-charged growth. The West Midlands saw the smallest increase, with BTL transactions rising by just 12 per cent, with sales in Wales and Scotland, which had different housing stimulus measures, rising by 8 per cent and 1 per cent respectively.
The regions that saw the greatest increases were those where the stamp duty saving was greatest, based on average house prices. However, they were also the regions that saw the greatest falls in house purchases after the stamp duty surcharge for buy-to-let and second homes was introduced in April 2016.
Between 2015 – the last year before the surcharge was introduced – and 2019, buy-to-let purchases fell 55 per cent in London and 51 per cent in the South East, whilst the South West decreased 41 per cent.
Despite the stamp duty holiday, transactions during the July 2020 to June 2021 12-month period were still 30 per cent below 2015 levels in London and 29 per cent lower in the South East.
Paragon Bank managing director of mortgages Richard Rowntree says: “The impact of the stamp duty saving on regions where house prices are generally higher is clear to see, with transactions in London and the South increasing by approximately half. There were also strong increases in the South West, North East and East Anglia.
“Despite this, tenant demand still outweighs supply in large swathes of the country, which is leading to record levels of rental inflation, and transactions still remain significantly below the level experienced before the stamp duty surcharge was introduced in 2016.
“As the Government pursues its ‘levelling up’ agenda, it needs all facets of the housing market to be working effectively, including a sufficiently sized private rented sector to facilitate labour market mobility and provide good quality homes for those who cannot or don’t want to own a home”
