Buy-to-let investment continues to show strength in the North of England, according to recent research by estate agency Hamptons. Despite ongoing pressures within the property market, the northern regions appear to remain appealing for landlords seeking strong returns.
So far this year, 39% of all buy-to-let purchases have been concentrated in the Midlands and North of England. This marks an increase from 34% in 2022 and a notable rise from just 24% in 2007, when Hamptons began recording such data.
Although this upward shift in investor focus towards the North is clear, the overall buy-to-let sector is currently facing challenges. New investment activity in the market has dropped to levels not seen since 2007, suggesting a more cautious approach among landlords nationwide.
During the first four months of 2025, only 10% of properties sold across Britain were snapped up by buy-to-let investors. This is slightly down from 11% during the same period last year and well below the peak of 16% recorded back in 2015.
Buy-to-let acquisitions have seen a decline across almost all parts of the UK since 2015, with just one region defying the trend. This shift started shortly before the government introduced a 3% stamp duty surcharge on second homes – a charge that was increased to 5% as of October last year.
Due to this surcharge, landlords now face a significant stamp duty burden. For instance, purchasing a buy-to-let worth £200,000 would now require a payment of £11,500 in stamp duty. A property priced at £400,000 would come with a staggering £30,000 charge.
The North East has stood out as the only region where landlord investment has grown. In 2025, landlords accounted for 28% of all property purchases in the region, underlining its popularity among buy-to-let investors.
Certain locations are also emerging as clear hotspots for buy-to-let activity, especially since the stamp duty changes came into effect last October. Nine out of the top ten most active areas for buy-to-let investors are now found in either the Midlands or the North.
Leading the list is Redcar and Cleveland, where landlords were responsible for purchasing half of all properties sold. In this area, the typical landlord spent just over £70,000 on a property and paid around £3,500 in stamp duty.
Moreover, eight of the top ten local authorities identified by Hamptons boast average rental yields that exceed the national average of 7.1%. Some of these locations are even delivering returns close to double figures, providing a buffer against rising costs.
County Durham is a standout example, offering an impressive average gross rental yield of 10.2%. These attractive yields are giving landlords more financial flexibility, helping them manage higher expenses and increased taxation.
However, not every hotspot offers above-average returns. Derby ranks as the third most popular location for landlords, with investors buying 39% of homes. Despite this activity, the average yield in Derby sits at a lower 6.7%.
Interestingly, Epping Forest in Essex has also caught investors’ attention. Nearly a third of properties sold in the past six months were bought by landlords, even though the average rental yield in the area is only 5.8%.
Despite some isolated interest in parts of the South, the broader trend suggests that landlords are increasingly steering clear of southern England. Hamptons attributes this to the generally higher property prices and the lower rental returns typically found in southern regions.
London, in particular, has experienced a sharp decline in investor activity. Only 8% of properties sold in the capital so far this year were bought by landlords – a stark contrast to the 16% figure recorded in 2015.
According to Hamptons, this shift is so pronounced that for every new rental property purchased in London, there are now over three buy-to-lets being bought in the North West, underlining the growing appeal of the northern market.
Scotland and Wales have experienced a notable decline in buy-to-let investment activity, with figures revealing a sharp downturn in landlord purchases across both nations.
In Scotland, landlords have faced increasingly strict rental regulations in recent years, including the introduction of rent caps. These tighter controls appear to have dampened investor appetite in the region.
So far this year, landlords have accounted for just 5% of property purchases in Scotland. This marks a significant drop compared to a decade ago, when 10% of homes were bought by investors.
A similar trend has emerged in Wales, where buy-to-let purchases have also decreased considerably. According to Hamptons, the proportion of homes bought by landlords in Wales has fallen by nearly two-thirds over the past ten years.
Currently, landlords make up only 6% of buyers in the Welsh property market, compared with 16% in 2015. The figures highlight a continued retreat from the sector in both Scotland and Wales as regulatory pressures and changing market dynamics shape investor behaviour.
Investors hunt for yields
Buy-to-let landlords are increasingly turning to areas with stronger rental returns to offset the growing costs of owning a rental property. These include higher mortgage repayments, ongoing maintenance charges, and increased taxes.
A key figure investors look at is the gross rental yield – this measures the annual rental income as a percentage of the property’s purchase price, before deducting taxes or other expenses.
To illustrate, if a landlord earns £10,000 annually from renting out a £200,000 property, the gross yield would be 5%.
This year, a record 23% of buy-to-let properties purchased delivered a double-digit rental yield, according to research from Hamptons. That’s a noticeable rise from 17% in 2024 and just 9% back in 2016.
This trend reflects a growing move towards Northern regions, where property prices are lower and yields tend to be higher.
For instance, on an average buy-to-let purchase of £198,550, each 1% increase in gross yield equates to around £1,985 more in annual rental income.
If that same amount were invested in the North East, the typical rental return would be about £18,400 per year. That’s around £7,010 – or 62% – more than the equivalent investment in London.
However, it’s worth noting that London properties have historically seen greater capital appreciation over time, even if rental yields are lower.
Aneisha Beveridge, head of research at Hamptons, pointed out that buy-to-let activity is slowing down in areas where high costs are squeezing profits.
She explained that while landlord purchases remain below historical levels, some investors are widening their search to explore more affordable regions.
One strategy being adopted is targeting cheaper homes that offer better yields, especially across the North of England where rental income goes further.
If this trend continues, Hamptons predicts that by 2033, the majority of buy-to-let activity will be concentrated in the Midlands and the North, rather than in Southern regions.
This geographical shift may also influence the rental market in the South. With fewer landlords purchasing in that part of the country, rental supply could tighten, adding pressure to tenants already dealing with stretched finances.
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