Average BTL yields at 15-year high, Paragon finds
Average buy-to-let (BTL) yields rose to 7.22% in Q3, the highest level since the first quarter of 2011, a specialist bank found.
Insight from Paragon Bank showed this was a 0.22-percentage-point rise from the previous quarter, and 0.28 percentage points higher than the typical yield in Q3 last year.
Average yields have been rising since 2022 due to subdued house price growth and sustained demand for private rented homes.
The strongest yield was found in the East Midlands, averaging at 8.1%. This was 0.55 percentage points higher than both the last quarter and the same period a year earlier.
The second-highest average yield was in the North East at 8.02%, followed by Scotland at 7.95% and the North West at 7.88%.
The lowest average rental yield was found in Greater London at 5.79% – however, this was 0.23 percentage points higher than in Q2 and 0.17 percentage points higher than the same period in 2025.
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HMOs generate the highest returns
Houses in multiple occupation (HMOs) continued to deliver the highest average yield at 8.8% – however, this was 0.06 percentage points lower than the previous quarter. Annually, this was a growth of 0.37 percentage points.
Multi-unit blocks (MUBs) generated average yields of 7.36%, followed by flats at 6.66% and terraced homes at 6.46%.
The typical yield generated by the rented flat had the strongest annual growth among other property types, increasing by 0.4 percentage points year-on-year. Yields on MUBs rose by 0.34 percentage points over the same period.
Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “Buy-to-let yields reaching their highest level since 2011 demonstrates the attractive returns that well-managed rental property can continue to generate.
“The increase reflects the balance between property values and rental income, with more subdued house price growth combining with strong demand for rented homes across many parts of the country.”
She added: “The regional figures also show why landlords carefully consider local market conditions when investing. Areas with more affordable property values and sustained tenant demand can offer particularly attractive yields, as we see in the East Midlands and across the North of England.”
