Buy-to-Let Boom: UK Rental Yields at 13-Year Peak

UK landlords are benefiting from the highest rental yields in more than a decade, and this is a great opportunity for property investors. The latest data from Paragon Bank shows that average rental yields were 6.93% in December 2024, the highest since February 2011.

Strong Returns for Savvy Investors

The latest statistics, from remortgage arrangements and buy-to-let mortgage availability, demonstrate a consistent yield rise, up from 6.72% in Q3 2024 and a 30bps uplift from the equivalent quarter in 2023.

Best Performing Regions

There are certain regions still to be favoured when it comes to profitability:

Wales recorded the highest at 8.09%.

The North West followed closely at 7.84%.

The South West yielded 7.75%.

Greater London reported the lowest mean at 5.48%.

Best Performing Property Types

As with past trends, complex property types achieved the highest returns:

Houses in Multiple Occupation (HMOs): 8.40%

Freehold blocks: 7.28%

Flats: 6.09%

Terraced houses: 6.05%

Why Rental Yields Are Rising

Demand continues to outstrip supply, driving rents upwards. With house price inflation steadying, savvy investing landlords—focusing on low-cost areas and high-yielding property types—are reaping good rewards.

Russell Anderson, Paragon Bank's Commercial Director, said: "A 13-year rental yield high demonstrates the strength of the buy-to-let sector. Landlords who select the most desirable addresses and invest in high-yielding property types are achieving robust returns, where there is ongoing demand from tenants." 

What This Means for UK Property Investors

Location is everything: London boroughs with affordable housing and high-demand rents continue to offer higher yields.

Diversification Pays: HMOs and multi-unit blocks provide a better rate of return than standard buy-to-let property.

Market Conditions Favour Landlords: With low and stable mortgage rates and ongoing high demand for rental property, buy-to-let investing remains extremely rewarding.

For more insightful advice and tips in UK real estate investing, remain connected with Magnate Assets.