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.
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