BTL rental yields increased to 6.96% in the first quarter of 2026, up from 6.92% in the previous quarter according to Paragon Bank’s latest BTL Yields Report.
Broken down regionally, Wales and the North East led the way with yields of 8.74% and 8.10%. However, both regions had recorded declines of 4bps and 9bps respectively.
Conversely, Greater London generated the lowest gross rental yields in the quarter at 5.74%. This represented a slip of 6bps.
As a region, the South East recorded the biggest increase from the previous quarter — of 13bps — to generate yields of 6.40% in Q1.
By property, HMO yields strengthened by 17bps to 8.78%, with MUFBs increasing 21bps to 7.48%.
Detached homes and bungalows generated the lowest yields at 4.60% and 5.10% respectively.
“Yields have started 2026 on a positive footing, edging up slightly,” said Louisa Sedgwick, managing director of mortgages at Paragon Bank.
“This reflects the slightly flat housing market during the quarter against tenant demand that is still strong, despite easing over the past 12 months.
“HMOs, MUFBs and semi-detached homes have particularly seen healthy yield increases over the period, while regionally Wales and the North East continue to generate the strongest returns.”
