Average buy-to-let yields reached their highest level in more than 15 years during the third quarter of 2026, according to new analysis from specialist lender Paragon Bank.
The average yield on properties in the bank’s buy-to-let offer data rose to 7.22%, the highest since the first quarter of 2011. Paragon’s Q3 2026 Buy-to-Let Yields report showed gross yields up 0.22 percentage points from 7.00% in the second quarter and 0.28 percentage points above the 6.94% recorded a year earlier. The data covers new mortgage offers for purchases and remortgages and uses six-month rolling averages.
The figures continue a strengthening in yields seen since 2022, driven by more subdued house price growth and continued demand for privately rented homes.
“Buy-to-let yields reaching their highest level since 2011 demonstrates the attractive returns that well-managed rental property can continue to generate,” said Louisa Sedgwick, managing director of mortgages at Paragon Bank (pictured).
“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.”
East Midlands leads regional buy-to-let yields
Landlords buying or remortgaging in the East Midlands generated the highest average yield at 8.10%, which was 0.55 percentage points above both the previous quarter and the same period last year. The North East recorded the second-highest yield at 8.02%, followed by Scotland at 7.95% and the North West at 7.88%.
The South West and Wales both stood at 7.79%, ahead of East Anglia at 7.53%, the West Midlands at 7.38% and the South East at 6.58%. Greater London continued to generate the lowest regional yield at 5.79%, although that was 0.23 percentage points higher than in the second quarter and 0.17 percentage points above a year earlier.
“The regional figures also show why landlords carefully consider local market conditions when investing,” she added. “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.”
By property type, houses in multiple occupation continued to generate the highest average yield at 8.80%. That was 0.06 percentage points lower than in the previous quarter, but still 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 the property types analysed, with yields up 0.40 percentage points on the third quarter of 2025. Multi-unit block yields rose by 0.34 percentage points over the same period.
