The Renters' Rights Act 2025, Interest Rates and where to buy in 2026: My take on the UK property market

I've had a lot of messages this month from people asking whether now is a bad time to invest in property. Between the Renters' Rights Act coming in on 1 May, interest rates not falling the way everyone expected, and all the usual noise in the news, I understand why people are nervous.

But the picture on the ground is quite a bit more positive than the headlines suggest. In some ways this is one of the better windows I've seen in a while for investors who want to do it properly. Let me walk you through why.

What's actually happening with prices

The latest Land Registry numbers put the average UK house price at around £268,000, up 1.3% over the last year. That sounds quiet, and nationally it is. The national figure hides what's really going on underneath.

In the North West, where most of my work is based, prices are up 3.1%. Northern Ireland is running at 7.5%. Wales and Scotland are both positive. The only parts of the country dragging the average down are London and the South East, with London off 1.7% over the year.

The affordable regional cities are doing exactly what I've been telling investors for years they would do. They're growing steadily, they're producing strong rental income, and they're not swinging about like the prime London market does. If you picked the right city last year, 2025 worked out well for you. 2026 is shaping up to be another one.

Where the yields actually are

The average UK gross rental yield is around 5.96%. Anything beating that comfortably is genuine high-yield territory, and there's plenty of it if you know the postcodes.

Liverpool is where I spend most of my time and it's still producing the goods. Top yields around 7.4% across the city, and 8% or more in specific postcodes like L6 and L7 if you pick the right stock. There's an £11 billion regeneration pipeline running through the Knowledge Quarter, Paddington Village and Liverpool Waters, and that's money already committed. Not a press release, not a plan. Actual spend creating jobs and pulling tenant demand into the city. I'm biased because it's home, but the numbers back it up.

Manchester is right there with it. Top yields around 7.8% in the best areas, and the city has delivered roughly 28% capital growth over the last five years. If you want a slightly cheaper entry, look at Salford. You get roughly a £32,000 discount on Manchester city centre prices but you're on the same tram lines with the same tenant base. That kind of arbitrage is what I look for when I'm sourcing for investors.

In the North East, Newcastle is producing top yields of around 9.7%, which is genuinely exceptional. Sunderland is one of the few places in the country where a 30% deposit on a yielding property comes in under £50,000. Lower rents than down south, but much lower prices, and that's where the cashflow maths really works.

Leeds is hitting top yields around 9.6% with a deep student and professional tenant base. Bradford is above 10% in some developments, helped by a £2 billion city centre regeneration that's already started.

In the Midlands, Birmingham and Nottingham give you that balanced play at 6 to 7% yields with good capital growth on top. Nottingham is producing yields around 9% with deposits under £73,000.

The gap between northern yields and southern yields is the widest it's been in years. You do not need to buy in London to build wealth in UK property. Right now, I'd argue you're better off not doing so unless you've got a very specific reason for it.

Interest rates

Bank Rate is at 3.75% and most people expect it to be held at the next meeting rather than cut. A few months ago we were all hoping for two or three cuts this year. The Middle East situation pushed energy prices up and inflation got a bit stickier, so the Bank is being cautious.

I understand why that's frustrating if you were waiting for cheaper money. But the best five-year fixed mortgages I'm seeing right now are in the 3.6 to 3.8% range for good borrowers, and that's still cheap historically. We all got spoiled by the 2021 world where you could get 1.5% mortgages, but that was never normal. The rates we have today are much closer to what property investment looked like for the twenty years before the financial crisis, and a lot of serious wealth was built in those decades.

The thing I'd really press on is this. Whatever rate you're being offered, stress-test your deal at 1 to 2% above it. If it still works at 5.5 or 6%, you've got a proper deal. If it only works at the current rate, that's not an investment, that's a gamble. I've seen too many investors get caught out over the years by skipping that one step.

The Renters' Rights Act

On 1 May the Renters' Rights Act comes in. Section 21 goes, fixed-term ASTs convert to periodic tenancies, rent increases are limited to once a year through a formal notice, and there are new rules on pets, rental bidding and rent in advance.

A lot of investors have asked me whether this is a reason to stay out of the market. It isn't. If anything, it's quietly one of the better things to happen for serious investors in years.

The Act is designed to push out the landlords who were cutting corners. The ones relying on Section 21 instead of managing their properties properly. The ones running bidding wars to push rents above asking. The ones refusing tenants with children or pets on a whim. Those landlords are now deciding whether to clean up their act or sell up. A lot of them are selling up.

Think about what that means if you're a decent investor. Amateur landlords leaving the market tightens rental supply in the exact cities where tenant demand is already strong. Fewer rental properties, same number of tenants, and rents start moving up. I'm already seeing that in the Liverpool market, and I'm hearing the same from contacts in Manchester and Leeds.

The things the Act asks of you as a landlord are not unreasonable. Have a proper tenancy agreement. Set your rents at market level rather than trying to squeeze tenants mid-contract. Respond to pet requests within 28 days. Don't discriminate against families or people on benefits. If any of that feels like a problem, property investment might not be the right game.

There's a bit of the Act nobody really talks about. Periodic tenancies can actually mean longer stays, not shorter ones. Good tenants who aren't pushed into the uncertainty of an annual renewal tend to settle in and stay put. Less churn means fewer voids and fewer re-letting fees. The build-to-rent operators who've been running this model for years will tell you the same thing.

If you already own property, the prep before 1 May is reasonably straightforward. Get your tenancy template updated. Know which of your tenancies convert automatically. Sort out a process for pet requests. Make sure your safety certificates and EPCs are in order. It's basic business housekeeping.

Why the picture is good

Regional prices are growing at a steady, sustainable pace. Yields in the cities I rate are the best they've been in years. Rental demand is strong and about to get stronger because of the supply squeeze the Act is causing. Mortgage rates are stable and workable. Most forecasters are pencilling in 4 to 5% UK price growth for 2026, with the North West and Midlands running ahead of that.

If you buy well, in the right postcode, at today's prices, on today's rates, you're giving yourself a proper chance to build something meaningful over the next five to ten years.

How I'd approach it

If you were sat across from me asking how to start, this is roughly what I'd say.

Pick your city before you pick your property. Location matters more than anything else. Look for confirmed regeneration, a strong employment base and real tenant demand. Liverpool, Manchester, Birmingham, Leeds and Nottingham are the five I'd put at the top of most investors' lists right now.

Get your finance sorted before you start viewing. A good broker is worth their weight in gold and will stop you falling in love with something you can't actually buy.

Run the numbers twice. Once on today's rates, once stress-tested higher. If it works on both, you're probably onto something. If it only works on one, walk away. There's always another deal coming.

Buy stock you'd be happy to let to your own family. Tired properties with bodged refurbishments are not the play anymore. The new regulations reward investors who put decent houses on the market at fair rents, which is how I've always thought it should be anyway.

And think in decades, not months. A lot of people come into property wanting it to make them rich by Christmas. That's not how it works. The investors I've watched build real wealth over the years are the ones who picked a strategy, stuck with it and kept going through the noise. Every one of them.

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The last few years in property haven't been easy, for any of us. There's a difference, though, between a market that's genuinely difficult and a market that just sounds difficult because of the headlines. This is the second kind.

The fundamentals are good. The numbers work if you do it properly. The Renters' Rights Act is going to reward investors who treat this as a serious business and push out the ones who don't, and that's a healthy thing for everyone who's in it for the right reasons.

If you'd like to see how I approach all this in more depth, including the strategies, the numbers, the frameworks, and the mistakes I've seen people make over the years, I've put everything I know into my property investment guide. It's the same approach we use at Advantage Investment with every investor we work with, and it comes from real deals done in real markets.

Property still works in 2026. For the right investor, it works better than it has in a long time. You just have to know where to look, and do it properly.