Buy-to-let yields in the UK have reached their highest level in 15 years, according to data from Paragon Bank’s third quarter 2026 report.
Gross yields rose to 7.22% in Q3 2026, up 0.22 percentage points from 7.00% in the previous quarter and 0.28 percentage points higher than the 6.94% recorded in Q3 2025.
The upward trend in yields has continued since 2022, driven by subdued house price growth combined with sustained demand for privately rented accommodation across the UK.
Regional performance
The East Midlands generated the highest average yield at 8.1%, representing a 0.55 percentage point increase both quarter-on-quarter and year-on-year. The North East recorded the second-highest average yield at 8.02%, followed by Scotland at 7.95% and the North West at 7.88%.
Greater London continued to produce the lowest regional yield at 5.79%, though this marked an improvement of 0.23 percentage points from Q2 2026 and 0.17 percentage points from the same period in 2025. The figures reflect ongoing challenges for London landlords balancing property values against rental returns.
Property type analysis
Houses in multiple occupation (HMOs) continued to generate the highest average yield at 8.8%, despite a marginal 0.06 percentage point quarterly decline. This represented annual growth of 0.37 percentage points. Multi-unit blocks produced the second-highest yield at 7.36%, followed by flats at 6.66% and terraced homes at 6.46%.
Flats recorded the strongest annual growth among property types analysed, with yields increasing 0.40 percentage points compared with Q3 2025. Multi-unit blocks rose 0.34 percentage points over the same period.
Louisa Sedgwick, Managing Director of Mortgages at Paragon Bank, said: “Buy-to-let yields reaching their highest level since 2011 demonstrates the attractive returns that well-managed rental property can continue to generate. The increase reflects the balance between property values and rental income, with more subdued house price growth combining with strong demand for rented homes across many parts of the country.”
Sedgwick added that the regional variations highlight why landlords consider local market conditions when making investment decisions, noting that areas with more affordable property values and sustained tenant demand can offer higher yields.
The data comes as the rental sector faces ongoing regulatory changes, with yields providing a key metric for landlords assessing portfolio viability amid shifting market conditions.
