According to the Hamptons Lettings Index, this is down from 11% in 2024 and down from a high of 16%.

The report noted that BTL purchases have fallen across all regions in Great Britain over the last 10 years, barring the North East.

The North East is the most popular region for BTL purchases, with 28% of purchases in this area going to landlords. This is an increase from 23% in 2015.

It is also the highest yielding region in the country, where new BTL properties achieved a 9.3% gross yield, which is higher than the national average of 7.1%.

The East Midlands, West Midlands, Yorkshire and the Humber and the North West accounted for 15%, 14%, 12% and 15% respectively of BTL purchases so far this year.

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Scotland accounted for the lowest, at 5%, while Wales was estimated at 6% and East England, the South West and London came to 8%.

Hamptons said this showed that investors are still active in the Northern markets, noting that nine out of the 10 BTL hotspots since the stamp duty surcharge was upped in November 2024 were in the Midlands and North of England.

More investors are also looking to buy properties outside of the capital, with nearly two-thirds of London-based investors buying outside the capital this year. This is an increase from 41% a decade ago and 24% in 2007.

Lower entry costs led to 18% of London-based investors buying a BTL property in one of the three Northern regions this year, more than triple a decade ago.

Landlords curbing rent increases on renewed contracts

Hamptons said slower rental growth on the open market and falling mortgage costs meant that fewer landlords were increasing rents when it came to contract renewal.

Around 55% of landlords in Great Britain increased the rent when a tenancy was renewed last month, a drop from a high of 49% in April 2024.

In April, the average rent on renewal reached £1,257 per calendar month, which is 3.7% up on last year.

The rent on a home where a new tenant moved in increased by 1.2% year-on-year.

Hamptons said the average rent on a new let has increased 36% over the last five years, while renewals have lagged at 28%.

In London, rents on newly let properties have been falling for the last five months. The average rent in the capital fell 1.4% year-on-year in April, while renewal rents increased 0.5%. Just 23% of landlords in the capital increased the rent upon renewal in April, down from 37% in April 2024.

BTL investment ‘gradually grinding to a halt’

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

She continued: “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.”

Beveridge added: “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, and where tenants’ finances are already most stretched.”

Beveridge noted: “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.”