"Typically, regions with lower average property values and sustained high levels of tenant demand generate higher yields. We see this clearly across northern England and Wales, and that is reflected in landlord demand for new properties in those locations"
- Louisa Sedgwick - Paragon Bank
Gross rental yields in Wales rose during the third quarter, reinforcing the country’s position as the top-yielding location in the UK.
Landlords in Wales achieved an average gross yield of 8.84% at the end of September, up from 8.59% in the second quarter. Paragon’s buy-to-let lending data indicated that yields have climbed steadily since the first quarter of 2023, when they were 7.13%, according to Paragon Bank’s Q3 Buy-to-Let Yield Report.
Other regions also saw shifts in yields. The North East recorded an increase, finishing Q3 at 8.16%, up from 8.10% in Q2. The North West and South West tied at 7.81%, while Yorkshire and Humber achieved 7.80%. Landlords in Greater London generated the lowest yields at 5.65%, followed by the South East at 6.49%.
On an annual basis, Wales led in yield growth, increasing by 0.86 percentage points compared with Q3 2024. Other regions with notable rises included the East Midlands (+0.77pp), West Midlands (+0.42pp), and East Anglia (+0.35pp).
With university students starting the new academic year in September, properties in student postcodes continued to outperform those in non-student areas. Landlords in student-dense areas saw average yields of 7.31%, up from 7.17% at the start of the 24/25 academic year, compared with 6.65% for non-student properties.
Overall, UK yields eased slightly from the 14-year high of 7.12% recorded in Q2 to 6.97% at the end of Q3.
By property type, yields for houses in multiple occupation (HMO) increased by 0.04 percentage points to 8.48% during the quarter. Terraced properties rose to 6.27%, while flats remained steady at 6.28%.
Louisa Sedgwick, Paragon Bank managing director of mortgages, said, “With 30 years of buy-to-let lending data, we are in a unique position to offer insight into landlord trends. Typically, regions with lower average property values and sustained high levels of tenant demand generate higher yields. We see this clearly across northern England and Wales, and that is reflected in landlord demand for new properties in those locations.”
She added, “Student property has always been popular with landlords, and that is reflected in both higher yields generated in known student postcodes and HMO properties that typically house students from their second year onwards. We expect this to continue to be the case despite uncertainty over university funding, particularly driven by domestic students.”
