Buy-to-let investment in Britain has slumped to its lowest level since before the 2008 financial crisis, as landlords grapple with higher taxes, rising mortgage costs and stricter regulation.
New research from estate agency Hamptons reveals that landlords accounted for just 10 per cent of all UK property purchases in the first four months of 2025 — the smallest share since 2007 and a sharp drop from the 16 per cent peak recorded in 2015.
The data also shows a striking geographical shift in investment trends. A record 39 per cent of buy-to-let purchases this year have taken place in the Midlands or north of England, up from 24 per cent in 2007, as investors pursue better yields and lower entry costs. In contrast, landlords bought just 8 per cent of homes sold in London during the same period.
London-based landlords are increasingly looking beyond the capital. This year, 65 per cent of investors registered in London purchased property elsewhere — more than double the figure from 2007 (24 per cent), and a notable rise from 41 per cent ten years ago.
The shift northward comes amid a succession of tax increases that have eroded the profitability of buy-to-let. Reforms introduced by former chancellor George Osborne in 2016 — including a three-percentage-point stamp duty surcharge on second homes and the phasing out of mortgage interest relief — have significantly impacted returns.
More recently, Rachel Reeves, the current chancellor, surprised investors by raising stamp duty by a further two percentage points in her Autumn Budget, while Labour’s strengthening of tenants’ rights has further dampened investor confidence.
Since autumn 2022, higher mortgage rates have made property investment in the south of England even less attractive, with some landlords warning of an impending rental supply crunch in the capital and the southeast.
According to Hamptons, every region of Britain has seen a decline in landlord purchases since 2015 — with the sole exception of the northeast, where 28 per cent of homes sold so far this year were bought by investors. The region also boasts the UK’s highest average gross rental yield at 9.3 per cent, well above the national average of 7.1 per cent and far exceeding London’s 5.7 per cent.
Aneisha Beveridge, 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. By 2033, the Treasury could be losing £161 million a year in stamp duty revenue, due to landlords avoiding more expensive markets in the south.”
She added that this geographical rebalancing of landlord activity may also put further pressure on rents in southern England, where tenant demand remains high and affordability is already stretched.
Local authorities seeing the greatest landlord activity in 2025 include Redcar and Cleveland, where half of all properties were purchased by investors, followed by Darlington (40 per cent) and Derby (39 per cent) — underlining the appeal of affordable, high-yielding regions.
The data points to a fundamental reshaping of the buy-to-let landscape in the UK — one that could have lasting implications for regional rental markets, government revenues, and housing availability in key urban areas.
