Wales leads for UK landlord yields – Paragon

Landlords in Wales are enjoying the UK’s strongest returns, data reveals.

According to Paragon Bank’s Q3 Buy to Let Yield Report, the region recorded an impressive average gross yield of 8.84% by September’s end.

That’s a rise from 8.59% in the previous quarter and a big jump from 7.13% in early 2023.

High tenant demand

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

She added: “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.”

Regional yields

Paragon’s data also shows that other regions saw gains with the North East delivering an 8.16% yield, up from 8.10% in Q2.

The North West and South West tied for third, each posting 7.81%, while Yorkshire and Humber trailed at 7.80%.

Greater London lagged behind with the lowest yield at 5.65%, followed by the South East at 6.49%.

Wales also led in annual yield growth, with an increase of 0.86 basis points compared to Q3 2024.

The East Midlands, West Midlands and East Anglia also reported robust yearly rises of 0.77, 0.42, and 0.35 basis points, respectively.

Student property yield

The bank’s report underscores the strength of student properties.

Landlords in student-heavy postcodes earned an average yield of 7.31%, up from 7.17% at the start of the 2024/25 academic year.

They are outperforming non-student properties at 6.65%.

Houses in multiple occupation (HMOs) remained the top-performing property type, with yields climbing to 8.48%, a 0.04 percentage point increase from Q2.

Terraced properties saw a modest uptick to 6.27%, while flats held steady at 6.28%.