In a hole in the ground there lived a hobbit.
... Not a nasty, dirty, wet hole, filled with the ends of worms and an oozy smell, nor yet a dry, bare, sandy hole with nothing in it to sit down on or to eat: it was a hobbit-hole, and that means comfort." ― J.R.R. Tolkien, The Hobbit, or There and Back Again
Tolkien spent much of his childhood growing up in the south of Birmingham, from the ages 3-19. The countryside and nearby landmarks are thought to have inspired many familiar places in Middle Earth.
I visited Sarehole Mill, a water mill built in 1542. It was still operational in Tolkien's days, and inspired the old mill in Hobbiton. Now that it's a museum, they have a Tolkien exhibit along with historical artifacts about the mill.
Matthew Boulton (one of the "Golden Boys" from an earlier post) leased the mill at one point and had an early steam engine there for metal working:
The mill is part of the "Tolkien Trail" in Birmingham. I've always loved Tolkien, and was happy to visit the mill and Hobbiton surroundings!