Gross buy-to-let rental yields edged higher in Q1 2026, rising to 6.96% from 6.92% at the end of the previous quarter, according to lending data from Paragon Bank. The figures, drawn from the bank's Q1 2026 Buy-to-Let Yields report, point to a market holding steady against a backdrop of softening tenant demand.
Wales and the North East topped the regional table, generating yields of 8.74% and 8.10% respectively. The North West (7.87%), East Midlands (7.58%) and Yorkshire & the Humber (7.45%) rounded out the top five. At the other end of the scale, Greater London recorded the lowest gross yields at 5.74%.
By property type, HMOs and multi-unit blocks saw the strongest gains. HMO yields increased by 0.17 percentage points to 8.78%, while multi-unit blocks rose 0.21 percentage points to 7.48%. Detached homes and bungalows generated the weakest returns, at 4.60% and 5.10% respectively.
"Yields have started 2026 on a positive footing, edging up slightly," said Louisa Sedgwick, managing director of mortgages at Paragon Bank (pictured). "This reflects the slightly flat housing market during the quarter against tenant demand that is still strong, despite easing over the past 12 months."
"HMOs, MUBs and semi-detached homes have particularly seen healthy yield increases over the period, while regionally Wales and the North East continue to generate the strongest returns. We're seeing robust demand in student markets in Wales, particularly, which is underpinning the strength of this market."
