Landlords ended 2024 with the highest average rental yield since 2011, according to mortgage offer data from Paragon Bank.
In December 2024, rental yields achieved by landlords reached an average of 6.93%.
This is the highest level since the 7.12% recorded in February 2011.
Rents grew during 2024, with average rental yields of 6.72% recorded in Q3, 33bps higher than the same point in 2023.
At a regional level, the highest average rental yields (8.09%) were in Wales.
The North West and South West followed, with average rental yields of 7.84% and 7.75%, respectively.
Conversely, the lowest average rental yield (5.48%) was reported in Greater London.
HMOs generated the highest yields of 8.4%, followed by freehold blocks at 7.28%, flats at 6.09%, and terraced houses at 6.05%.
“A key component of this is demand, something that has outstripped the supply of privately rented homes for some time,” said Russell Anderson, commercial director at Paragon Bank Mortgages (pictured above).
“This has caused market rents to rise which, in turn, has helped to sustain strong yields despite house price inflation.”
“While yields are a good indicator of the regular income that landlords will typically see, to get a complete picture of the returns an investment property can generate, we must also take into account aspects such as how they are financed, capital gains, landlord deposit, and any improvements that have been made."
