Landlords head north for higher yields

Landlords are increasingly turning their attention to Northern areas, and if current trends continue, by 2033, most buy to let purchases will be in the Midlands and North, Hamptons says.

The North offers more affordable properties, and better returns are offsetting the burden of higher stamp duty and mortgage rates.

Hamptons says that in the first four months of 2025, a record 39% of buy to let acquisitions occurred in these regions, a significant rise from 34% in 2022 and 24% in 2007.

The shift comes as overall BTL activity has slumped to its lowest level since 2007, with investors accounting for just 10% of home sales during the same period.

That’s down from 11% in 2024 and a peak of 16% in 2015.

The decline is largely down to a 5% stamp duty surcharge introduced in November 2024, which has disproportionately impacted pricier markets like London and the South of England.

Plus, with fewer landlords investing in the South, rents will inevitably rise.

BTL investment is slowing down

Aneisha Beveridge, the head of research at Hamptons, said: “Buy to let investment is gradually grinding to a halt in some markets where higher purchase and mortgage costs take their toll.

“However, 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.”

She added: “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.”

North is an investing haven

It now appears that the North East has emerged as a haven for investors, with landlords snapping up 28% of homes sold in 2025, up from 23% a decade ago.

The region boasts the highest gross rental yield in the country at 9.3%, well above the national average of 7.1%.

Redcar and Cleveland leads the pack, with investors purchasing half of all homes sold, attracted by an average property price of £70,300 and a modest £3,515 stamp duty bill.

Meanwhile, London and Wales have seen sharp declines in landlord activity.

In the capital, investors bought just 8% of homes in 2025, down from 16% in 2015, while Wales saw a drop from 16% to 6% over the same period.

Scotland, grappling with tighter rental regulations, recorded the lowest investment levels, with landlords acquiring only 5% of properties sold.

Incentives for Northern investment

The financial incentives in the North are clear: the average buy to let property in the Midlands and North cost £150,480 in 2025, nearly half the £292,240 paid in the South.

This price gap translates to a £11,190 saving on stamp duty.

Also, 23% of BTL purchases this year achieved double-digit yields, up from 17% in 2024, reflecting the pivot to high-yield Northern markets.

The rental trends also reflect changing market dynamics, Hamptons adds.

It says that in April 2025, 45% of landlords raised rents upon tenancy renewals, down from 50% a year earlier.

The average renewal rent reached £1,257 per month, a 3.7% increase from 2024, though growth has slowed from a peak of 9.2% in October 2023.

In London, rents for new lets fell 1.4% year-on-year, while renewal rents edged up 0.5%, with only 23% of landlords increasing rents, down from 37% in April 2024.

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