South West England is the region that has seen the highest year-on-year rental yield growth, Paragon Bank’s Q2 Buy-to-Let Yield Report has revealed.
Rental yields generated by buy-to-let properties in South West England increased from 7.27% to 8.06% between Q2 2024 and the same period this year, analysis of Paragon Bank’s lending data shows.
This growth of 0.79 percentage points represents the highest of all regions across England, Scotland and Wales.
It is likely that the strong yields of buy-to-let properties in the South West cities of Plymouth and Taunton is helping to drive this growth.
GOOD RETURNS
With returns of 9.51%, Plymouth tops Paragon’s table of rental yields at city level, while Taunton sits in 14th place with potential returns of 8.36%.
Paragon’s recently published buy-to-let hotspots index highlights how Plymouth’s appeal is translating into investment. The city’s PL4 postcode saw the second highest purchase volumes in the year to 30th June, only bested by Cardiff’s CF24.
The East Midlands closely followed, with landlords able to achieve average yields of 7.48% in the second quarter, up by 0.77 percentage points from 6.71% in Q2 2024.
Heading further east, average yields on buy-to-let properties in East Anglia grew by 0.67 percentage points over the period, making it the region with the third biggest increase. This was followed by its Midlands neighbour, the West Midlands, where yield growth of 0.52 percentage points was recorded.
ACROSS THE UK
At the other end of the table, Scotland was the only region to record a contraction in yield growth, with a small decline from 7.56% to 7.48% across the year.
Overall, the 12 months between Q2 2024 and Q2 2025, average yields in England, Scotland and Wales increased from 6.70% to a near record high of 7.11%.
Wales remained the highest yielding region at 8.59%, followed by the South West (8.06%) and North West (7.92%). Greater London retained its position as the region achieving the lowest yield at 5.73%, reflecting the high cost of property in that market.
BUY-TO-LET APPEAL
Louisa Sedgwick, Managing Director of Mortgages at Paragon Bank, says: “It’s encouraging to see that most regions across England, Scotland and Wales have seen a steady increase in the average yields over the past year.
“Additionally, potential returns remain near the record high level we reported earlier in the year. A key component of this is the continued demand for rented property. Alongside long-term capital gains, this illustrates the enduring appeal of buy-to-let investment.
“It is important to note, however, that while yields offer a useful snapshot of the regular income landlords can expect, a full understanding of an investment property’s returns also requires considering factors such as financing methods, capital appreciation, the initial deposit, and any enhancements made to the property.”
