Its research showed that students generate an average yield of 6.45%, while young singles generate 6.22%, followed by retired people at 6.16%.
Those offering the lowest rental yields included non-housing allowance benefit claimants at 5.78% and young couples and manual workers at 5.94%.
The average yield across the market is 6.2%, Paragon said.
In addition, it found that the number of properties in a landlord’s portfolio has little effect on the overall yield, with landlords with one property generating the same average yield as landlords with more than 20 properties at 6.2%.
Yet, landlords with between two and four properties saw average yields of 6.5%.
Meanwhile, the survey showed there are notable regional differences in yield, with the West Midlands top at 6.5%, followed by Yorkshire & Humber (6.4%) and the North East (6.2%).
Central London has the lowest yields at 5.5% owing to the high cost of property in the capital.
Nigel Terrington, chief executive of Paragon Group, said: “Yields are an important component of a landlord’s overall business plan, because they give a good indication of the income that the property generates.
“Of course, returns for many landlords will often be higher than stated yields as these are calculated at the current rental income against the property’s value today, not taking into account capital appreciation since the landlord purchased the property or their LTV.”
Terrington added: “Student yields typically outperform the wider market because they are let on a per-room basis, which can generate higher rental income. On the downside, they tend to require a higher degree of maintenance, so landlords have to factor that cost into their overall business models.”
