I recall reading somewhere that some of the places in the Shire in the Lord of the Rings were actually based on some real locations around where Tolkien grew up in the West Midlands here in the UK (I think the Hobbiton mill is based on a real mill close to Birmingham - apparently although this could be wrong). I was wondering if any of the other fictional locations in Middle-Earth were based on or inspired by real life locations and whether these things are mentioned in any of Tolkiens letters or his biography (or in any of his sons writings)
Most of the locations in Middle Earth were intended to be generic representations of the corresponding virtues/ills. As Tolkien mentions in Letter #181, the Shire was meant to be a rural location though not specifically England, but he also points out he draws on his own experience so there is undoubtedly an influence there:
There is no special reference to England in the 'Shire' – except of course that as an Englishman brought up in an 'almost rural' village of Warwickshire on the edge of the prosperous bourgeoisie of Birmingham (about the time of the Diamond Jubilee!) I take my models like anyone else – from such 'life' as I know.
Mordor was meant to capture over-industralization, so as NominSim's Cracked article mentions there was a specific area near Birmingham that fitted description. There may have been some inspiration, but Tolkien didn't attribute it directly, again preferring the idea of it as a combined concept of all of the examples of industrialization.
The Dead Marshes are another location that very commonly linked with Tolkien's experiences in WWI on the Western Front.
The Lauterbrunnen Valley in Switzerland was apparently the model for several of Tolkien's illustrations of Rivendell.
The BBC says
It was whilst J R R Tolkien spent time at Stonyhurst College in the Ribble Valley that he penned the long awaited follow up to The Hobbit.
This article from the Daily Mail fleshes out the bones somewhat.
There are many more references out there.
Here are some things that Christopher notes in volume VI of The History of Middle-earth, 'The Return of the Shadow'. I have added some notes below too, where I can offer additional information I think might help some or be of interest. I also am including something from the letters: something that Tolkien absolutely contradicts certain claims about location. I am not providing all context because some of these are in footnote; put another way I am trying to limit the amount of text but keeping all the name related information intact. This answer also has some etymology on some of the names but I still try to keep it only to places that actually exist and there is a connexion of some kind.
My father first wrote here: 'the Brandybucks of Wood Eaton on the other side of the shire, on the edge of Buckwood -- a dubious region.' He first changed (certainly at the time of writing) the name of the Brandybuck stronghold from Wood Eaton (a village in the Cherwell valley near Oxford) to Bury Underwood (where 'Bury' is the very common English place-name element derived from Old English byrig, the dative of burg 'fortified place, town'); then he introduced the name of the river, replaced Bury Underwood by Buckland, and replaced Buckwood by the Old Forest.
Another place burg appears is the Hornburg as in the Battle of the Hornburg (which the film just calls The Battle for Helm's Deep). I want to say it's used as a descriptive word in different parts of the story too - perhaps in Mordor as one example.
Next, as suggested by Connor Lloyd in this answer: https://scifi.stackexchange.com/a/149751/85680 Bree is based on Brill in Buckinghamshire. Connor if you want to add the quote to your answer feel free; it was your answer that inspired me to look it up (as I remembered it) and continued finding some other references.
My father first put 'an old village which had an inn', but the change to 'the old village of Bree, on the west side of Bree-hill. It had an inn' was almost certainly made as he wrote (and 'Prancing Pony' above 'White Horse' likewise). This is where the name first appears, based on Brill in Buckinghamshire, a place which he knew well, for it sits on a hill in the Little Kingdom of Farmer Giles of Ham (see Carpenter, Biography, p. 160). The name Brill is derived from the old British word bre 'hill', to which the English added their own word hyll.
In chapter XVIII AGAIN FROM BUCKLAND TO THE WITHYWINDLE, part (i) A Conspiracy is Unmasked of The Return of the Shadow Christopher has this:
The main road within Buckland is described (on a rejected page only) as running 'from the Bridge to Standelf and Haysend.' Standelf is never mentioned in the text of LR, though marked on my father's map of the Shire and on both of mine; on all three the road stops there and does not continue to Haysend, which is not shown as a village or any sort of habitation At the first two occurrences of Crickhollow in this chapter the name was first Ringhay, changed to Crickhollow (in the passage cited in note 2 on p. 283 the name is a later addition to the text). At the third occurrence here Crickhollow was the name first written. Ringhay refers to the 'wide circle of lawn surrounded by a belt of trees inside the outer hedge.'
 Standelf means 'stone-quarry' (Old English *stān-(ge)delf, surviving in the place-name Stonydelph in Warwickshire).
Again although it didn't show up in The LR (there were several maps and I'm not sure if it's the maps that are published) there is the reference to Stonydelph in Warwickshire and I find this relevant. If someone feels that isn't relevant because it didn't make it I have no problem removing it; I am an (amateur) etymologist so this is relevant in my mind.
As for the letters there was a critic (I guess? I can't recall and I only have the relevant page here) who wrote the following:
[...] One can clearly see before one the fireside evenings in the peaceful villa out at Sandfield Road in Headington near Oxford....with the Barrowdowns or Headington Hills in the rear and the Misty Mountains or the 560 feet Shotover in the background.
Tolkien has this to say:
!!This is such outrageous nonsense that I should suspect mockery, if I did not observe that O. is ever ready to assume intimate knowledge that he has not got. [...] The book was written before I moved to Headington, which has no hills, but is on a shoulder (as it were) of Shotover.
Just to refute any link there.
There is a persistent rumour that Orthanc was modelled on Perrott's Folly, a tower in Rotton Park, Birmingham, about 2 miles from the school Tolkien attended as a child -- although the Cracked article linked in the comments credits the bell tower of Birmingham University, this seems more likely to me, largely because you could imagine having a battle on the top of that tower, but the Birmingham University tower has a pitched roof that would make that rather difficult...
Tolkien spent many of the years of World War One that so haunt LOTR in Staffordshire
http://www.geograph.org.uk/photo/5153768 SJ9819 : Ancient Oak in Brocton Coppice by John M Ancient Oak in Brocton Coppice
http://www.geograph.org.uk/photo/5153213 Tolkien's 'House of a Hundred Chimneys
http://www.geograph.org.uk/photo/5153110 SJ9922 : St John the Baptist RC Church by John M St John the Baptist RC Church
"Shugborough Hall itself, Tolkien’s House of a Hundred Chimneys, arriving at Essex Bridge( The Grey Bridge of Tavrobel) at the confluence of the Sow and Trent Rivers."
In Great Haywood where Tolkien lived for a while, Lord Hatherton moved all his estate workers into a construction called The Ring in 1810, demolished in 1965 but very much a feature of the village before then and almost certainly known about by Tolkien as a prominent feature. He also owned Hatherton Colliery where many of the workers ended up. In other words...."The Ring to Rule them All and in the darkness bind them."
Regarding naming the nearby village of Brewood reminds me of Tolkien's Bree.
If the filmmakers of the biopic are looking for locations then this area would be prefect. Gypsey Cottage and the surrounding area are beautiful and authentic with Brocton Woods, the remains of Teddesley Hall Stables and Cannock Chase WWI hut and trenches idea for WWI scenes. Cannock Chase would be familiar with filmmakers recently for The Girl with the Gifts. The Essex bridge and Canal and Shurgbourgh Hall are very attractive too. They are secluded too.
There is also and extract from Lord Hatherton's Journal about the brave Sam. 1854
4th Jan Snow, no trains thhttps://www.facebook.com/rough P. No post from London, roads impassable, servants can hardly get to stables. This morning an old Teddesley labourer, Samuel Wall, had his hand torn off by machinery at the farm. They tried to take him in a cart to Penkridge but could not proceed because of the snow. Then they tried to take him to the infirmary at Stafford, but were equally prevented. So they returned home where the 2 P doctors, Lister and MacKenzie attended him and took his arm off below the elbow. How they succeeded in reaching his residence I do not know. I know no harder life than the village doctor, nor any so ill paid in general. [4 hrs. to get to Watling St, P turnpike 8ft deep in places]
10th Jan We walked through the snow to see old Samuel Wall at Gypsy Green who has had his arm amputated. He is 59 and bore the operation remarkably well and is going on well.
The mill in Hobbiton that you mention in the question is based on Sarehole mill.