Buy-to-let yields have reached their highest level since the first quarter of 2011, rising to an average of 7.22% in the third quarter of 2026, according to data from Paragon Bank.
The bank’s Q3 2026 Buy-to-Let Yields report found that average gross yields increased by 0.22 percentage points from 7% in the previous quarter and were 0.28 percentage points higher than the 6.94% recorded in Q3 2025.
The figures continue an upward trend in rental yields since 2022, reflecting a combination of more subdued house price growth and sustained demand for privately rented homes.
The East Midlands recorded the highest average regional yield at 8.10%, an increase of 0.55 percentage points compared with both the previous quarter and the same period last year.
The North East followed with an average yield of 8.02%, while Scotland recorded 7.95% and the North West 7.88%. The South West and Wales both generated average yields of 7.79%.
Greater London continued to record the lowest regional yield, at 5.79%. However, this represented an increase of 0.23 percentage points quarter-on-quarter and 0.17 percentage points year-on-year.
East Anglia recorded the largest quarterly increase among the regions, with yields rising by 0.59 percentage points to 7.53%.
Houses in multiple occupation (HMOs) remained the highest-yielding property type, generating an average gross yield of 8.80% during the third quarter.
Although this was 0.06 percentage points lower than in Q2 2026, it represented an annual increase of 0.37 percentage points.
Multi-unit blocks delivered the second-highest average yield at 7.36%, followed by flats at 6.66% and terraced houses at 6.46%.
Flats recorded the strongest annual growth among the property types analysed, with yields increasing by 0.40 percentage points compared with Q3 2025. Yields on multi-unit blocks rose by 0.34 percentage points over the same period.
At the other end of the scale, detached properties generated an average yield of 4.77%, the lowest of the property types included in the analysis.
Louisa Sedgwick, managing director of mortgages at Paragon Bank, said the latest figures demonstrated the potential returns available from well-managed rental property.
“Buy-to-let yields reaching their highest level since 2011 demonstrates the attractive returns that well-managed rental property can continue to generate,” she said.
“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 regional variations highlighted the importance of local market conditions when making investment decisions.
“The regional figures also show why landlords carefully consider local market conditions when investing. Areas with more affordable property values and sustained tenant demand can offer particularly attractive yields, as we see in the East Midlands and across the north of England.”
