Wales has retained its place as the top yielding location for landlords, according to Paragon Bank’s Q3 Rental Yield Report.
In the third quarter BTL properties in Wales generated an average gross yield of 8.84% compared to 8.59% the preceding quarter.
BTL rental yields in Wales have risen consistently since the start of 2023 when they averaged 7.13%.
The North East of England was the second-highest yielding market for landlords in the third quarter with an average rental yield of 8.16%, up from 8.10% in the preceding quarter.
The North West and South West both finished in joint third with yields of 7.81%.
Landlords in Greater London generated the lowest yields of 5.65% during the quarter, followed by the South East at 6.49%.
Paragon also found student accommodation to be one of the strongest performing property sectors as the new academic year began towards the end of the quarter.
Landlords with property in student postcodes generated an average yield of 7.31%, up from 7.17% at the start of the 2024/25 academic year, compared to 6.65% in non-student postcodes.
By property type, yields for HMO property firmed up during the quarter, rising by 0.04 percentage points to 8.48%. Terraced property also rose to 6.27%, with flats unchanged at 6.28%.
“Typically, regions with lower average property values and sustained high levels of tenant demand are generating higher yields,” said Louisa Sedgwick, managing director of mortgages at Paragon Bank.
“We see this clearly across northern England and Wales and that is reflected in landlord demand for new properties in those locations.”
“Student property has always been popular with landlords and that is reflected in both higher yields generated in known student postcodes and HMO properties that typically house students from their second year onwards.”
