BTL yields highest since 2011

BTL yields have reached their highest level since 2011, according to new research from Paragon Bank.

Analysis of the bank’s BTL offer data found that gross average yields of these properties reached 7.22% in the third quarter.

This is the highest overall yield recorded since the first quarter of 2011.

The third quarter of this year registered a 22bps increase from the gross average in the preceding period, putting yields 28bps higher than the same point in 2025.

The strength of average BTL yields varies in terms of geography, however.

East Midlands was the strongest performing region with average yields of 8.1%, 55bps higher than the previous quarter.

The North East recorded the second-highest average yield at 8.02%, followed by Scotland at 7.95% and the North West at 7.88%.

Conversely, Greater London continued to generate the lowest average regional yield at 5.79%, though this was 23bps higher than in the second quarter.

By property type, HMOs continued to generate the highest average yield at 8.80%.

Although this was bps lower than in the previous quarter, it represented annual growth of 37bps.

MUFBs produced the second-highest yield at 7.36%, followed by flats at 6.66% and terraced homes at 6.46%.

Flats recorded the strongest annual growth among the property types analysed, with yields increasing by 40bps since the third quarter of 2025.

“The increase reflects the balance between property values and rental income, with more subdued house price growth combining with strong demand for rented homes across many parts of the country,” said Louisa Sedgwick, managing director of mortgages at Paragon Bank (pictured above).

“The regional figures also show why landlords carefully consider local market conditions when investing.

“Areas with more affordable property values and sustained tenant demand can offer particularly attractive yields, as we see in the East Midlands and across the North of England.”