Wales has cemented its position as the UK’s highest-yielding location for buy-to-let investors with gross rental returns rising to 8.84% in the third quarter, according to new data from Paragon Bank.
The figure marks an increase from 8.59% in the previous quarter and continues a steady upward trend since early 2023, when yields in Wales stood at 7.13%.
The region’s performance helped lift overall UK yields to an average of 6.97%, only slightly down from the 14-year high of 7.12% recorded in the second quarter.
Yields also strengthened in the North East, which rose to 8.16%, while the North West and South West both ended the quarter at 7.81%, narrowly ahead of Yorkshire and the Humber at 7.80%.
LANDLORD TRENDS
At the other end of the spectrum, landlords in Greater London achieved the lowest yields at 5.65 per cent, followed by the South East at 6.49%.
Annual yield growth was strongest in Wales, up 0.86 percentage points compared with the same period last year. The East Midlands, West Midlands and East Anglia also recorded notable annual gains.
Student housing continued to outperform the wider rental market, as the new academic year boosted demand. Landlords with properties in student postcodes generated average yields of 7.31%, compared with 6.65% in non-student areas.
By property type, houses in multiple occupation (HMOs) remained the highest yielding, at 8.48%, followed by terraced homes at 6.27% and flats at 6.28%.
UNIQUE POSITION
Louisa Sedgwick, Paragon Bank’s Managing Director of Mortgages, says: “With 30 years of buy-to-let lending data, we are in a unique position to offer insight into landlord trends.
“Typically, regions with lower average property values and sustained high levels of tenant demand are generating higher yields.
“We see this clearly across northern England and Wales and that is reflected in landlord demand for new properties in those locations.”
And she adds: “Student property has always been popular with landlords and that is reflected in both higher yields generated in known student postcodes and HMO properties that typically house students from their second year onwards.
“We expect this to continue to be the case despite uncertainty over university funding, particularly driven by domestic students.”
