Landlords generated average rental yields of 6.3% in the second quarter of the year, Paragon reveals.

The lender’s latest private rented sector report shows that average yields generated by landlords have not hit 6.3% since the third quarter of 2014.

Average yields have also not surpassed the current level since Q3 2012 when they reached 6.7%.

The current high marks a recovery in yields achieved by landlords, which have climbed steadily from the 15-year low of 5.2% recorded in the first and second quarter of 2023.

Paragon says a correlation can be seen between portfolio size and yields, with higher average yields of 6.9% reported by landlords with larger portfolios of 11 or more properties.

Yields of 6.9% were also generated by landlords who hold all of their properties in limited company structures.

A similar divergence can be seen when data is split by property type, particularly houses in multiple occupation (HMOs), whose owners report yields of 7.2%.

Paragon Bank managing director for mortgages Richard Rowntree says: “Rental yields are a key measure of the health of lettings businesses so it’s fantastic to see them hit a 10-year high after rebounding from the low recorded around this time last year.”