South-west England has seen the highest year-on-year rental yield growth, according to Paragon Bank’s Q2 BTL Yield Report.
Rental yields generated by BTL properties in south-west England increased from 7.27% to 8.06% between Q2 2024 and the same period this year, analysis of Paragon’s lending data shows.
Paragon said it is likely that the strong yields of BTL properties in the region’s urban areas, such as Plymouth and Taunton, is helping to drive this growth.
With returns of 9.51%, Plymouth tops Paragon’s country-wide table of rental yields at city level, while Taunton sits in 14th place with potential returns of 8.36%.
The East Midlands was a close runner-up, with landlords achieving average yields of 7.48% in the second quarter, up by 0.77 percentage points from 6.71% in Q2 2024.
Heading further east, average yields on BTL properties in East Anglia grew by 0.67 percentage points over the period, making it the region with the third-biggest increase.
This was followed by the West Midlands, where yield growth of 0.52 percentage points was recorded.
At the other end of the table, Scotland was the only region to record a contraction in yield growth, with a small decline from 7.56% to 7.48% across the year.
Overall, for the 12 months between Q2 2024 and Q2 2025, average yields in England, Scotland and Wales increased from 6.7% to a near-record high of 7.11%.
Wales remained the highest-yielding region at 8.59%, followed by the South West and North West.
Greater London retained its position as the region achieving the lowest yield at 5.73%.
Louisa Sedgwick, managing director of mortgages at Paragon Bank (pictured above), commented: “It’s encouraging to see that most regions across England, Scotland and Wales have seen a steady increase in average yields over the past year.
“Additionally, potential returns remain near the record high level we reported earlier in the year.
“A key component of this is the continued demand for rented property.
“Alongside long-term capital gains, this illustrates the enduring appeal of BTL investment.
“It is important to note, however, that while yields offer a useful snapshot of the regular income landlords can expect, a full understanding of an investment property's returns also requires considering factors such as financing methods, capital appreciation, the initial deposit, and any enhancements made to the property."
