New buy-to-let purchases are being increasingly concentrated in the North of England, as investors target higher-yielding homes with lower entry costs. A record 39% of buy-to-lets purchased during the first four months of 2025 were in the North of England or the Midlands, up from 24% in 2007 and 34% in 2022 when interest rates started rising (chart 1).
Conversely, investors are shifting away from the South of England, where properties are typically more expensive and generate lower rental yields. Here, the new 5% stamp duty surcharge (SDLT) and higher mortgage rates have hit particularly hard. Just 43% of buy-to-let purchases this year were located in London, the East of England, South East or South West, down from 53% in 2015, just before stricter tax and regulatory changes started coming into play. The remaining 17% of purchases were in Wales and Scotland.
The average investor buying in the Midlands and North of England paid £150,480 for a new buy-to-let this year, £141,760 or 49% less than a landlord who bought in the South of England for an average of £292,240. This lower property price would save an investor £11,190 on stamp duty costs.
This comes as new buy-to-let investment fell this year to a level not seen since 2007. Buy-to-let investors purchased 10% of homes sold across Great Britain in the first four months of 2025, down from 11% in 2024 and a high of 16% in 2015.
Buy-to-let purchases have decreased in every region of Great Britain over the last decade, apart from in the North East. The North East remains the capital of buy-to-let, where landlords purchased 28% of homes sold so far this year, up from 23% in 2015. It’s also the highest yielding region in the country, where the typical new buy-to-let achieved a 9.3% gross yield, outperforming the national average of 7.1%.
Wales and London have seen the most significant decline in buy-to-let purchases. The share of homes bought by a landlord in Wales has fallen by nearly two-thirds over the last decade. Investors made up 6% of all buyers in Wales so far this year, down from 16% in 2015.
Meanwhile, London, the most expensive region in the country with the lowest rental yields, has also seen a significant fall. Investors purchased 8% of homes sold in the capital so far this year, the same proportion as last year, but a figure that has more than halved since 2015 when investors made up 16% of all buyers in the capital. For every new rental home purchased in London, there are now 3.1 buy-to-lets bought in the North West.
Share of homes bought by a landlord in each region
| 2025 (Jan-Apr) | YoY Change | Change since 2015 | Gross Yield | |
| North East | 28% | 1% | 5% | 9.3% |
| East Midlands | 15% | 0% | -3% | 7.2% |
| West Midlands | 14% | -2% | -7% | 7.8% |
| Yorkshire & The Humber | 12% | -2% | -4% | 7.9% |
| North West | 12% | -1% | -5% | 8.2% |
| South East | 9% | 0% | -6% | 6.5% |
| London | 8% | 0% | -8% | 5.7% |
| South West | 8% | -2% | -6% | 6.4% |
| East of England | 8% | 1% | -7% | 6.7% |
| Wales | 6% | -2% | -10% | 8.7% |
| Scotland | 5% | -1% | -5% | – |
Source: Hamptons & Land Registry
Scotland, where tighter rental regulations and rent caps have been introduced in recent years, has the lowest levels of investment. Here, investors purchased 5% of homes sold this year, half the 10% levels seen a decade ago.
Despite less investment in general, landlords remain active in Northern markets. Nine of the 10 buy-to-let hotspots since the stamp duty surcharge was increased in November 2024 from 3% to 5% are in the Midlands and the North of England. Redcar and Cleveland tops the list, where investors purchased 50% of homes sold. Here, the typical landlord spent £70,300 on their new buy-to-let, paying a £3,515 stamp duty bill.
Eight of the 10 local authorities on the hotspot list offered gross rental yields above the England & Wales average (7.1%), with many nearing double-digits (table 2). These higher yields give investors more headroom to cover higher costs and taxes.
Top 10 buy-to-let hotspots (last six months)
| Local Authority | Region | % of homes bought by a landlord (last 6 months) | Average gross yield | |
| 1. | Redcar & Cleveland | North East | 50% | 9.8% |
| 2. | Darlington | North East | 40% | 9.6% |
| 3. | Derby | East Midlands | 39% | 6.7% |
| 4. | Gateshead | North East | 38% | 9.4% |
| 5. | Newcastle upon Tyne | North East | 38% | 8.2% |
| 6. | Middlesbrough | North East | 35% | 9.0% |
| 7. | County Durham | North East | 32% | 10.2% |
| 8. | East Staffordshire | West Midlands | 31% | 7.1% |
| 9. | Epping Forest | East of England | 31% | 5.8% |
| 10. | Leeds | Yorks. & The Humber | 26% | 8.1% |
Source: Hamptons
With stamp duty bills becoming a significant barrier to entry in London, an increasing number of investors are buying properties outside the capital. Nearly two-thirds (65%) of London-based investors bought a buy-to-let outside the capital this year, up from 41% a decade ago and just 24% in 2007.
The crossover point when London investors were more likely to buy outside the capital came in 2018, just after the 3% SDLT surcharge on second homes was introduced in 2016 and when tax relief on mortgage interest for higher-rate taxpayers began to be phased out.
Lower entry costs encouraged 18% of London-based investors to purchase a buy-to-let in one of the three Northern regions this year, more than triple the share (5%) who did so a decade ago.
Although yields have been increasing nationwide over recent years, investors are focusing on higher-yielding areas to ensure profitability after accounting for higher mortgage costs, maintenance expenses and taxes. This year, a record 23% of buy-to-let purchases achieved a double-digit yield, up from 17% in 2024 and 9% in 2016. This partly reflects the shift towards Northern areas, where yields tend to be higher.
On the typical buy-to-let purchase costing £198,550, each 1% rise in the gross yield brings in an extra £1,985 a year in rental income. If a landlord invested £198,550 in the North East, they would earn an average of £18,400 in rental income each year, £7,010 or 62% more than if they invested in London. However, over the long run, property prices in the capital have generally increased more.
