Buy-to-let landlords saw average rental yields reach their highest level since 2011, according to newly released figures from Paragon Bank—offering renewed confidence for property investors capitalising on sustained tenant demand and limited supply.
Data covering April 2025 shows that the average yield across buy-to-let investments hit 7.11%, a record not seen since February 2011, when yields were just slightly higher at 7.12%. This marks a significant jump from 6.94% at the end of Q4 2024 and underlines the resilience of rental returns in the current market.
Yield growth driven by rents rising faster than house prices
Paragon’s lending data, based on offers for both purchase and remortgage, confirms a 40 basis point year-on-year increase in average yield. The bank attributes this to a combination of rent rises and relatively flat house price inflation, meaning income is outpacing capital values—a welcome trend for investors prioritising income.
“Buy-to-let continues to offer strong returns for investors,” said Russell Anderson, Commercial Director of Mortgages at Paragon Bank. “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.”
The figures support what many landlords on the ground are already seeing: tenant demand remains fierce, and supply isn’t keeping up. In fact, this latest uptick continues a broader upward trend since yields bottomed out in May 2017 at 4.91%.
Regional hotspots: wales and the north outperform London
Across the UK, regional variances remain stark. Landlords in Wales are currently seeing the highest average yields at 8.43%, rising from 8.09% just four months earlier. That’s closely followed by Yorkshire and the Humber (7.97%), the North (7.94%), and the South West (7.93%)—all areas where housing stock remains relatively affordable and rental demand robust.
By contrast, Greater London, while often prized for capital appreciation, continues to deliver the lowest average yield, currently 5.78%. Even so, this marks a 30-basis point increase from Q4 2024, suggesting rental growth in the capital is beginning to catch up—albeit slowly.
HMOs and strategy-driven yields remain top performers
The type of property investors choose continues to play a pivotal role in performance. HMOs (Houses in Multiple Occupation) remain the highest-yielding asset class, achieving 8.50% yields—up from 8.41% in December 2024. Despite requiring more hands-on management and greater upfront compliance, the returns for landlords willing to take on the challenge remain attractive.
Anderson commented: “The most recent economic instability caused by the threat of Trump’s tariffs is understandably impacting business confidence across many sectors, but these figures offer tangible evidence that buy-to-let continues to deliver. For savvy landlords, the opportunity lies in strategically choosing property types and regions that deliver strong rental returns.”
steady yields reassure landlords in turbulent times
In a landscape dominated by political shifts and regulatory reform, this latest yield data offers much-needed reassurance for UK landlords. Returns are not only holding firm but improving—driven by rising rents and bolstered by structural undersupply in the rental market.
As interest rates stabilise and inflation cools, the long-term outlook for yield-led property investing continues to look strong—especially for those willing to adapt, specialise, and invest where demand is loudest.
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