"Potential returns remain near the record-high level we reported earlier in the year. A key component of this is the continued demand for rented property. Alongside long-term capital gains, this illustrates the enduring appeal of buy-to-let investment"
- Louisa Sedgwick - Paragon Bank
South West England has recorded the highest annual rental yield growth across the UK, according to Paragon Bank’s Q2 2025 Buy-to-Let Yield Report.
Average yields in the region rose from 7.27% in Q2 2024 to 8.06% in Q2 2025, an increase of 0.79 percentage points, the largest of any UK region over the period.
Strong returns in cities such as Plymouth and Taunton are helping to drive this growth. Plymouth leads Paragon’s city-level yield table with average returns of 9.51%, while Taunton ranks 14th at 8.36%. The city’s PL4 postcode also saw the second highest volume of buy-to-let purchases in the year to 30 June, behind only Cardiff’s CF24.
The East Midlands followed closely behind the South West, posting yield growth of 0.77 percentage points to reach an average of 7.48%. East Anglia saw the third-largest rise, with yields up 0.67 points year-on-year, while the West Midlands reported a 0.52-point increase.
Scotland was the only region to see a decline in yields, slipping from 7.56% to 7.48%.
Across England, Scotland and Wales, average yields increased from 6.70% in Q2 2024 to 7.11% a year later, near a record high. Wales remains the highest-yielding region overall at 8.59%, followed by the South West (8.06%) and the North West (7.92%). Greater London recorded the lowest average yield at 5.73%, reflecting the region’s higher property prices.
“It’s encouraging to see that most regions across England, Scotland and Wales have seen a steady increase in average yields over the past year," comments Louisa Sedgwick, managing director of mortgages at Paragon Bank.
She adds, "Additionally, potential returns remain near the record-high level we reported earlier in the year. A key component of this is the continued demand for rented property. Alongside long-term capital gains, this illustrates the enduring appeal of buy-to-let investment."
“It is important to note, however, that while yields offer a useful snapshot of the regular income landlords can expect, a full understanding of an investment property's returns also requires considering factors such as financing methods, capital appreciation, the initial deposit, and any enhancements made to the property.”
