Buy-to-let landlords are achieving their highest average rental yields in more than a decade, according to the latest data from Paragon Bank.
Figures for April 2025 show average yields hitting 7.11%, marking the strongest return since February 2011, when yields stood marginally higher at 7.12%. The new figures surpass the previous recent high of 6.94% recorded at the end of Q4 2024 and reflect a 40 basis point increase compared with the same period last year.
Paragon Bank’s lending data suggests that yields have been boosted by the ongoing mismatch between high tenant demand and the continued undersupply of privately rented properties. At the same time, house price inflation has moderated, helping to improve rental income relative to property values.
The long-term trend also shows a steady increase since the market’s post-2017 low of 4.91%, with landlords adapting strategies to focus on properties that offer greater returns.
Russell Anderson, commercial director of mortgages at Paragon Bank, said: “Our latest lending data highlights how average rental yields have continued to increase from the 13-year high we revealed at the end of last year. While the most recent economic instability caused by the threat of Trump’s tariffs is understandably impacting business confidence across many sectors, these figures offer tangible evidence that buy-to-let continues to offer strong returns for investors.”
Anderson added that landlords targeting high-return strategies or areas with affordable housing were particularly well-placed: “This is particularly true where landlords employ a strategy of targeting properties that offer higher returns, HMOs being the most obvious example, or investing in areas where property is relatively more affordable but benefits from the strong tenant demand we see all over the UK.”
Regionally, Wales led the UK with average yields of 8.43%, up from 8.09% in December 2024. Yorkshire & Humberside (7.97%), the North (7.94%) and the South West (7.93%) followed closely behind. Greater London recorded the lowest average yield at 5.78%, despite an increase of 30 basis points since the end of last year.
In terms of property type, Houses in Multiple Occupation (HMO) continue to deliver the highest returns, with average yields of 8.50% – up from 8.41% in December.
