"One of the main ways landlords are trying to mitigate against higher stamp duty and mortgage costs is by seeking better-yielding and cheaper properties, increasingly in Northern England"
- Aneisha Beveridge - Hamptons
Buy-to-let investors are increasingly turning their attention to the North of England and the Midlands, drawn by higher rental yields and more affordable property prices. A record 39% of all buy-to-let purchases in the first four months of 2025 took place in these regions, up from 34% in 2022 and just 24% in 2007.
According to Hamptons' latest research, this shift reflects a growing divergence in investor sentiment between the North and South of England. In the South, high property prices and weaker yields—combined with rising mortgage rates and a 5% stamp duty surcharge—have made the region less appealing.
So far this year, only 43% of buy-to-let purchases occurred in London, the South East, South West or East of England, a steep decline from 53% in 2015. Wales and Scotland accounted for the remaining 17%.
Landlords buying in the Midlands and North paid an average of £150,480 for a property this year—£141,760 less than the £292,240 average in the South. This price difference also translates into a significant saving on stamp duty, amounting to £11,190.
Despite this shift in focus, total buy-to-let investment has declined nationally. Investors accounted for just 10% of all home purchases across Great Britain between January and April 2025, down from 11% last year and a peak of 16% in 2015.
Every region in the UK has seen a decrease in buy-to-let activity over the last decade, except the North East. In this region, landlords bought 28% of homes sold this year, up from 23% in 2015. It also leads the UK in rental performance, with a typical new buy-to-let generating a 9.3% gross yield compared to the national average of 7.1%.
Meanwhile, Wales and London have seen the steepest declines. Just 6% of homebuyers in Wales were landlords in 2025, down from 16% in 2015. In London, landlords purchased 8% of homes—unchanged from last year but down significantly from 16% a decade ago. Today, for every buy-to-let purchased in London, 3.1 are bought in the North West.
Scotland has also seen a sharp drop, with investor purchases falling to 5% of all transactions this year—half the level seen ten years ago. Rental caps and tighter regulations have made the region less attractive.
Despite a general cooling of the market, landlords are still active in Northern areas. Nine of the top ten buy-to-let hotspots since the stamp duty surcharge increased in November 2024 are in the Midlands and North. In Redcar and Cleveland, landlords bought 50% of all homes sold, spending just £70,300 on average and paying £3,515 in stamp duty.
Eight of the ten areas with the highest investment levels also offered yields above the 7.1% average in England and Wales. These higher returns are helping investors offset increased costs and taxes.
London-based investors are increasingly buying outside the capital to reduce entry costs. This year, 65% of them did so—up from 41% in 2015 and 24% in 2007. The tipping point came in 2018 after the 3% stamp duty surcharge was introduced and tax relief on mortgage interest began to phase out.
Lower costs have encouraged 18% of London landlords to invest in the North this year, up from just 5% a decade ago.
A growing focus on yield is driving the move. This year, 23% of buy-to-let purchases delivered double-digit yields, up from 17% in 2024 and just 9% in 2016. On a typical £198,550 property, each additional 1% yield adds £1,985 annually in rental income. In the North East, that same property would earn £18,400 a year—£7,010 or 62% more than it would in London.
Still, the capital retains long-term appeal thanks to stronger historical price growth.
Rental growth trends
Rental growth is beginning to moderate, particularly for tenants renewing existing contracts. In April, 55% of landlords raised the rent on renewals—down from 49% a year ago.
For nearly two years, rents on renewals have risen faster than on new lets as landlords aimed to close the gap between existing and open-market rents. The average renewal rent in April reached £1,257 per month, up 3.7% year-on-year. In comparison, the average new-let rent rose just 1.2%, or £17 per month.
That said, new lets have still outpaced renewals over time. In the past five years, rents on new lets have climbed 36%, while renewal rents have increased 28%, leaving tenants renewing their contracts paying £103 less per month on average.
In London, rents on newly let homes have now been falling for five straight months. In April, new-let rents fell 1.4% year-on-year, while renewal rents rose 0.5%. Only 23% of landlords in the capital raised rents at renewal, down from 37% a year ago.
“Buy-to-let investment is gradually grinding to a halt in some markets where higher purchase and mortgage costs take their toll," explained Hamptons' head of research Aneisha Beveridge.
However, she adds, "While new landlord purchases remain well below long-term averages, some investors have been looking further afield for new opportunities. One of the main ways landlords are trying to mitigate against higher stamp duty and mortgage costs is by seeking better-yielding and cheaper properties, increasingly in Northern England."
“Based on current trends, 2033 will mark the point at which the bulk of buy-to-let purchases are in the Midlands and North of England rather than the South. However, this shift could cost the Treasury £161m or a 12% annual fall in revenue due to investors purchasing cheaper properties that come with lower stamp duty bills. This may also have a knock-on impact on rents if supply conditions in the South of England worsen, where tenants' finances are already most stretched.
Beveridge concludes, “However, investors will still find opportunities in the South of England, particularly if rents continue to rise and house prices pick up pace after nearly a decade of stronger capital growth further North. Lower interest rates will also help, not only by lowering mortgage costs but by reducing rates available on savings accounts, which might make buy-to-let look more appealing.”
