Landlord rental yields rise above 7% – Paragon

Landlords looking to strengthen returns may find the latest regional rental yield figures interesting.

Paragon Bank’s lending data shows the average gross yield reached 7.02% by the end of June, up from 6.96% at the close of the first quarter.

Its Q2 2026 Buy to Let Yields report records a longer rise from 5.84% in 2021, following the end of the Covid lockdowns.

Scotland produced the largest quarterly increase, with yields rising by 0.53 percentage points to 7.97%.

Yields continue growing

Paragon’s managing director of mortgages, Louisa Sedgwick, said: “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.”

She added: “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.”

Regional yields rise

Paragon also says that the West Midlands recorded an increase of 0.24 percentage points to 7.24%, while Yorkshire and Humber rose by 0.21 percentage points to 7.58%.

Greater London saw its average yield fell by 0.16 percentage points during the quarter to 5.58%.

Wales remained the highest-yielding location at 8.87%.

Scotland’s rise took it level with the North East in second place, with both regions recording 7.97%.

London is bottom

London remained at the bottom of the regional table, followed by the South East, where the average yield was 6.48%.

HMOs continued to produce the highest yields by property type, increasing by 0.14 percentage points to 8.90%.

Multi-unit blocks followed at 7.18%, while flats generated an average yield of 6.45% and terraced homes recorded 6.31%.

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