The lender says that average rental yields hit 7.11% in April, the highest level since February 2011, when the figure came in at 7.12%. 

It adds that “following consecutive monthly increases during the first quarter of this year” April’s figure beats the 6.94% level posted at the end of the final three months of last year, which was then a 13-year high.

The lender says that rises in BTL purchase and remortgage rental income to property value ratio, “reflects a moderation of house price inflation alongside rent increases, driven by continued high levels of tenant demand and undersupply of privately rented homes”. 

The three highest yields are in Wales at 8.43%, Yorkshire & Humberside at 7.97% and the North at 7.94%. 

While the three lowest are Scotland at 7.46%, the South East at 6.57% and Greater London at 5.78%. 

The firm adds that the overall upward trend in average yields “has been evident” since the low of 4.91% in May 2017.   

Paragon Bank commercial director of mortgages Russell Anderson says: “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 [US President Donald] Trump’s tariffs is understandably impacting business confidence across many sectors, these figures offer tangible evidence that BTL continues to offer strong returns for investors. 

“This is particularly true where landlords employ a strategy of targeting properties that offer higher returns, houses in multiple occupation 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.”