Landlords in Wales recorded the highest average gross rental yield in the UK, reaching 8.84% by the end of September, an increase from 8.59% in the second quarter. According to Paragon’s latest buy-to-let data, yields in Wales have shown steady growth since early 2023, when they stood at just 7.13%.
The North East also experienced a small rise in yields, ending the period at 8.16%, up from 8.10% in Q2. Meanwhile, both the North West and South West reported identical yields of 7.81%, securing joint third place, while Yorkshire and the Humber followed closely behind at 7.80%. On the other end of the scale, Greater London saw the lowest returns at 5.65%, with the South East just above at 6.49%.
Wales also saw the largest year-on-year growth, with yields rising by 0.86 percentage points compared to the same period in 2024. Other regions with notable annual increases included the East Midlands (+77 basis points), West Midlands (+42bp), and East Anglia (+35bp).
The start of the new academic year also brought a strong performance from student rental properties, which continued to outperform the wider market. Landlords with homes in student areas generated an average yield of 7.31%, up from 7.17% at the beginning of the 2024/25 academic year, compared to 6.65% in non-student areas.
Despite regional and sector growth, the overall average yield across the UK dipped slightly from the 14-year high of 7.12% in Q2 to 6.97% in Q3.
Breaking it down by property type, HMO properties saw a small rise in yields, increasing by 0.04 percentage points to 8.48%. Terraced homes also improved to 6.27%, while flats remained steady at 6.28%.
Louisa Sedgwick, Managing Director of Mortgages at Paragon Bank, explained that regions with lower average property prices and high rental demand tend to produce stronger yields. “We’re seeing this trend clearly across northern England and Wales, which continue to attract strong interest from landlords,” she said.
She added that student properties remain a reliable investment, delivering higher yields in well-known student postcodes and through HMO properties that typically house students from their second year onwards. Sedgwick noted that demand in this sector is expected to remain firm, even with uncertainty surrounding university funding, particularly for domestic students.
| Region | Yield | Vs Q3 2024 |
| Wales | 8.84% | +0.86bp |
| North East | 8.16% | +0.13bp |
| North West | 7.81% | -0.08bp |
| South West | 7.81% | +0.22bp |
| Yorkshire & Humber | 7.80% | +0.17bp |
| Scotland | 7.57% | +0.08bp |
| East Midlands | 7.53% | +0.77bp |
| East Anglia | 7.39% | +0.35bp |
| West Midlands | 7.24% | +0.42bp |
| South East | 6.49% | +0.24bp |
| Greater London | 5.65% | +0.14bp |
| Property type | Yield |
| HMO | 8.48% |
| Freehold block | 7.05% |
| Flat | 6.28% |
| Terraced | 6.27% |
| Semi-detached | 5.58% |
| Bungalow | 5.04% |
| Detached | 4.76% |
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