New research by Gatehouse Bank has revealed that Winchester is home to the most vulnerable rental market as tax changes amplify the threats to landlords.

Tax changes in recent years – including the introduction of the extra 3% surcharge on second homes and the phasing out of mortgage interest tax relief – have curbed the buy-to-let market, leading to an environment in which yield is no longer king. Landlords can no longer consider yield alone, they must also take account of a range of local factors to protect their returns.

The findings from Gatehouse Bank found that the most exposed landlords are in Winchester – the ancient capital of England – where available rental properties have sat empty for 248 days, rents are over half of average earnings and yields are half those of top towns and cities.

Other locations where gains were hard to come by are Cambridge, Chichester, Warwick and Reading, while landlords are also vulnerable in Woking, Watford, Chelmsford, Oxford and Guildford.

The Bank’s study took into account the second tier of economic indicators, including how long available rentals have been on the market, as well as the affordability ratio between average salaries and rents, in contrast to studies which concentrate solely on yield. Based on yield alone, Padstow, Bedford, Taunton, Shrewsbury and Salisbury would make up the least attractive buy-to-let hunting grounds.

In the Gatehouse Bank research, though – which analysed 122 towns and cities in the UK – these locations ranked well above the bottom, in 49th, 100th, 95th, 40th and 78th place respectively.

At the other end of the spectrum, locations in the North and Midlands dominated the list of the places where landlords are least vulnerable, with Bootle in Merseyside emerging as one of the best locations to rent property thanks to annual yields of 5.6%. The rest of the top 5 was made up by Inverness, Stoke-on-Trent, Barnsley and St Helens, while the top 10 was completed by Telford, Dundee, Oldham, Southport and Bolton.

As for major cities in the UK, Manchester was in 34th, Birmingham took 75th spot and Glasgow was ranked 43rd. Meanwhile, London – where high property prices are known for shrinking yields and putting landlords off – was in 89th place.

The worst cities for affordability – with tenants paying the highest rents compared to earnings – were Edinburgh and London, with Oxford, Guildford and Brighton all scoring poorly on this metric.

The three tops cities for affordability, on the other hand, were all based in the North of England, with tenants in Hartlepool, Darlington and Stockton-on-Tees experiencing the best earnings-to-rent ratios.

On a nationwide basis, the research found that properties available to rent across the UK have been sitting on the market for an average of 197 days, while the typical yield is 4.6% and the average proportion of earnings to rent is 37%.

“What our research shows is that famous Northern hospitality is not a myth,” Charles Haresnape, chief executive at Gatehouse Bank, said. “It’s a great place not only to be a landlord but also to live, with cities in the North and the Midlands performing much better across all indicators.”

“Rental properties are let far quicker than in the South, which is no surprise when major cities like Liverpool and Manchester are within commuting distance of smaller towns like Bootle.”

He added: “What’s really striking is that in the areas that performed best, rental rates were far more affordable and this correlation underscores the symbiotic relationship between renters and landlords in areas where their investments could be deemed safest.”