Average landlord gross rental yields strengthened during the second quarter, with Scotland, the West Midlands and Yorkshire and the Humber recording the biggest increases, according to Paragon Bank.
The lender’s Q2 2026 Buy-to-Let Yields report found that the average yield reached 7.02% at the end of June, up from 6.96% three months earlier.
Rental yields have followed an upward trajectory since the end of the Covid lockdowns, rising from 5.84% in 2021.
Scotland recorded the strongest quarterly improvement, with its average yield increasing by 53 basis points to 7.97%. Yields rose by 24 basis points to 7.24% in the West Midlands and by 21 basis points to 7.58% in Yorkshire and the Humber.
BIGGEST DECLINE
Greater London experienced the biggest decline, with average yields falling by 16 basis points to 5.58%.
Wales retained its position as the UK’s highest-yielding region at 8.87%. Scotland’s improvement moved it into joint second place with the North East, where landlords also achieved an average yield of 7.97%.
London and the South East remained the lowest-yielding regions, at 5.58% and 6.48% respectively.
Houses in multiple occupation continued to generate the strongest returns by property type, with average HMO yields rising by 14 basis points to 8.90%.
Multi-unit blocks followed at 7.18%, while flats generated an average yield of 6.45% and terraced homes returned 6.31%.
RESILIENT LANDLORD RETURNS
Louisa Sedgwick (main picture), Managing Director of mortgages at Paragon Bank, says: “The second quarter saw a further strengthening in gross rental yields, continuing the positive trajectory we have seen in recent years.
“While the pace of movement varies across regions, the overall picture remains one of resilient returns for landlords, supported by sustained tenant demand and more subdued house price growth in parts of the market.
“Wales continues to lead the regional yield table, while Scotland, the West Midlands and Yorkshire and Humber all recorded notable quarterly improvements.
“HMOs also remain the highest-yielding property type, underlining the importance of more specialist rental accommodation in delivering stronger income returns for landlords where there is clear local demand.”
| Property type | Q2 26 yield | Vs Q1 26 |
| HMO | 8.90% | 0.14% |
| MUB | 7.18% | -0.29% |
| Flats | 6.45% | 0.10% |
| Terraced | 6.31% | 0.02% |
| Semi-detached | 5.80% | 0.21% |
| Bungalow | 5.03% | -0.08% |
| Detached | 4.70% | 0.10% |
| Region | Q2 26 yield | Vs Q1 26 |
| Wales | 8.87% | 0.08% |
| Scotland | 7.97% | 0.53% |
| North East | 7.97% | -0.08% |
| North West | 7.78% | -0.08% |
| Yorkshire & the Humber | 7.58% | 0.21% |
| East Midlands | 7.56% | 0.00% |
| South West | 7.41% | 0.02% |
| West Midlands | 7.24% | 0.24% |
| East Anglia | 6.94% | -0.05% |
| South East | 6.48% | 0.07% |
| Greater London | 5.58% | -0.16% |
Source: Paragon Bank
