Average buy-to-let yields have climbed to their highest level in more than 15 years, reaching 7.22% during the third quarter of 2026.
Paragon Bank’s latest analysis shows average gross yields increased from 7.00% in the second quarter and 6.94% a year earlier.
The Q3 figure is the highest recorded by the lender since the first quarter of 2011 and continues an upward trend in landlord yields seen since 2022.
Paragon attributes the increase to a combination of subdued house price growth and continued demand for privately rented homes.
EAST MIDLANDS LEADS
Landlords in the East Midlands recorded the highest average regional yield at 8.10%, up 0.55 percentage points both quarterly and annually.
The North East followed at 8.02%, with Scotland at 7.95% and the North West at 7.88%.
Greater London remained the lowest-yielding region at 5.79%, although returns increased by 0.23 percentage points from the previous quarter and 0.17 percentage points year-on-year.
East Anglia recorded the largest quarterly increase, rising 0.59 percentage points to 7.53%.
HMOs RETURN 8.80%
Houses in multiple occupation continued to deliver the highest yields by property type at an average 8.80%.
Multi-unit blocks followed at 7.36%, while flats returned 6.66% and terraced properties 6.46%.
Flats recorded the strongest annual increase, with yields rising 0.40 percentage points compared with Q3 2025.
At the other end of the market, detached properties produced an average yield of 4.77%, while bungalows returned 5.23%.
Louisa Sedgwick (main picture), Managing Director of Mortgages at Paragon Bank, says: “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 adds: “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.”
