Flats and terraced homes achieved the strongest gross rental yield growth for landlords in 2025, with Wales and the North East performing best regionally, data from buy-to-let mortgage specialist Paragon Bank has found.
Yields on flats finished the year at 6.33%, 0.24 percentage points higher than the same point the previous year, with terraced homes 0.23 percentage points higher at 6.28%. Houses in Multiple Occupation achieved the highest yields at the end of 2025 at 8.61%, up 0.20 percentage points on the previous year.
Paragon's Q4 2025 Buy-to-Let Yields report, based on the bank's lending data, found that regionally, yields in Wales grew by 0.74 percentage points to 8.83%, followed by the North East, up 0.38 percentage points to 8.20%. Yields in Greater London also performed well, increasing 0.30 percentage points to 5.78%.
Overall, average yields across the UK finished the year at 6.93%, broadly in line with the same period in 2024 (6.94%) and Q3 2025 (6.95%).
Following HMOs, multi-unit blocks achieved the second-highest yield by property type at 7.32% during Q4 2025, followed by flats and terraced homes. Regionally, Wales was the highest yielding location, followed by the North West (7.80%), the East Midlands (7.69%) and Yorkshire & Humber (7.68%).
Louisa Sedgwick (pictured), managing director of mortgages at Paragon Bank, explained the performance dynamics. "Yields have performed strongly since summer 2022, when house price growth began to slow, and rental inflation accelerated due to the imbalance between supply and demand," she said. "While we saw this momentum ease last year as the market normalised, we expect yields to remain stable throughout this year."
"Although overall yield growth was relatively flat in 2025, certain property types and regions stood out, reflecting varied local market conditions and shifting demand for specific kinds of homes," Sedgwick added.
