According to Paragon Bank’s Q3 Rental Yield report, rental yields in Wales improved from 8.59% in the second quarter and have been increasing since the first quarter of 2023.
The North East took the second position with a rental yield of 8.16%, up 0.13% on the same quarter last year.
The North West had the third-highest rental yield at 7.81%, which is 0.08% down on Q3 2024.
Greater London had the lowest rental yield at 5.65%, up 0.14% on Q3 2024. This was followed by the South East and the West Midlands at 6.49% and 7.24%, which are up 0.24% and 0.42% on the same period last year.
| Region | Yield | Versus Q3 2024 |
| Wales | 8.84% | +0.86bp |
| North East | 8.16% | +0.13bp |
| North West | 7.81% | -0.08bp |
| South West | 7.81% | +0.22bp |
| Yorkshire and the Humber | 7.80% | +0.17bp |
| Scotland | 7.57% | +0.08bp |
| East Midlands | 7.53% | +0.77bp |
| East Anglia | 7.39% | +0.35bp |
| West Midlands | 7.24% | +0.42bp |
| South East | 6.49% | +0.24bp |
| Greater London | 5.65% | +0.14bp |
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The report said student property yields continued to outperform non-student property. 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.
HMOs have highest rental yield by property type
Looking at property type, houses of multiple occupation (HMOs) had the highest rental yield at 8.48%, followed by freehold blocks at 7.05% and flats at 6.28%.
At the other end of the spectrum, detached properties had the lowest rental yield at 4.76%.
This was followed by bungalows at 5.04% and semi-detached properties at 5.58%.
| Property type | Yield |
| HMO | 8.48% |
| Freehold block | 7.05% |
| Flat | 6.28% |
| Terraced | 6.27% |
| Semi-detached | 5.58% |
| Bungalow | 5.04% |
| Detached | 4.76% |
Louisa Sedgwick, Paragon Bank’s managing director of mortgages, said: “With 30 years of buy-to-let lending data, we are in a unique position to offer insight into landlord trends. Typically, regions with lower average property values and sustained high levels of tenant demand are generating higher yields. We see this clearly across Northern England and Wales and that is reflected in landlord demand for new properties in those locations.”
She added: “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. We expect this to continue to be the case despite uncertainty over university funding, particularly driven by domestic students.”
