Buy-to-let investors are turning their back on the cooling London market and searching for returns further north, according to a survey by BDRC on behalf of Paragon.
East Midlands landlords achieved 6.7% average rental yield while those in the West Midlands had yields of 6.2%.
By comparison, one in six landlords operating in central London reported downward pressure on rents.
Investors in the capital were least likely to be buying property, with a net 16% saying they had sold some property in the last quarter.
Landlords in the Midlands have been boosted by strong economic growth in the region, the higher education sector and successful regeneration of Birmingham, Paragon said.
More than four out of 10 landlords in the East Midlands and one third of landlords in the West Midlands said tenant demand was increasing.
Nationally just under a quarter of all landlords indicated rising demand.
John Heron, managing director of mortgages at Paragon (pictured), said: “These findings highlight a big regional difference in landlord experience and buying habits.
“Some central London landlords appear to be scaling back a little while landlords in the Midlands continue to invest on the back of a positive outlook.”