Money Mail, citing a study commissioned by Aldermore Bank, has identified a shortlist of UK cities where buy‑to‑let investors can still earn strong returns even as the Renters Rights Act reshapes the market. The analysis, released in May 2024, ranks 50 locations and warns landlords to steer clear of “dead zones” that could erode profitability.

Aldermore’s top five buy‑to‑let hotspots for 2024

According to the Aldermore‑Money Mail report, the five cities offering the highest yield potential are Manchester, Liverpool, Birmingham, Leeds and Newcastle. Each of these markets combines relatively low purchase prices with robust rental demand, delivering gross yields between 7% and 9%. Manchester leads the pack with an average yield of 9.2%, driven by a surge in student accommodation and a growing tech sector. Liverpool follows at 8.7%, benefitting from regeneration projects around the waterfront. Birmingham posts 8.4% as the UK’s second‑largest city attracts both domestic migrants and overseas investors. Leeds and Newcastle round out the list with yields of 8.1% and 7.9% respectively, supported by strong university enrolments and expanding service‑industry jobs.

How the Renters Rights Act reeshapes landlord calculations in Leeds

The Renters Rights Act, which came into force in April 2024, introduces stricter tenancy deposit protections and caps on rent increases in England’s major cities. in Leeds, the new rent‑cap limit of 5% per year has already prompted some investors to reassess cash‑flow projections. As Anisha Beveridge of Hamptons notes, “Bigger investors are using this time to buy homes that smaller, accidental landlords are selling.” This shift suggests that seasoned landlords may still find value by acquiring properties at discounted prices, offsetting the tighter rent controls.

However, the Act also mandates more rigorous safety checks and energy‑efficiency standards, which could increase upfront refurbishment costs. landlords who fail to meet the new minimum EPC rating of C may face penalties, adding another layer of risk to the Leeds market.

Dead zones to avoid: cities where yields have slipped below 4%

While the report highlights lucrative pockets, it also flags several “dead zones” where yields have fallen under 4% due to oversupply and stagnant rents. London’s inner boroughs, Bristol, and Cambridge are named as areas where property prices have outpaced rental growth, making new acquisitions less attractive. In London, average gross yields sit at a meager 3.5% after the combined impact of the Police (Stop and Search) Act 2016 and recent rent‑control measures.

Investors are advised to conduct thorough due‑diligence, especially in markets where vacancy rates have risen above 10% in the past year, according to Aldermore’s data.

What the Police (Stop and Search) Act 2016 means for homelessness and landlord risk

The Police (Stop and Search) Act 2016, originlly aimed at reducing street homelessness, has indirectly affected the rental market by lowering the number of peole sleeping rough. As a result, the pool of potential tenants has become more stable, which can be a positive signal for landlords seeking reliable income streams. Yet the Act also introduced stricter background checks for tenants, adding an administrative burden for landlords who must now verify additional documentation.

Industry observers note that the legislation’s impact on homelessness is modest, but its side‑effects on tenancy vetting have raised compliance costs for small‑scale landlords.

Who remains unclear: the role of large institutional investors

The report does not disclose how many of the top‑performing purchases are being made by institutional funds versus individual landlords. While Beveridge mentions that “bigger investors” are active, the exact scale of their involvement remains unknown. This lack of transparency makes it harder for independent landlords to gauge competitive pressure in the highlighted hotspots.

Overall, the Aldermore analysis suggests that strategic location choices, combined with an awareness of new regulatory costs, can still allow landlords to “make a mint,” as the Money Mail headline claims.