Latest data points to continued growth in investor returns
Rental yields for buy-to-let landlords reached their highest level in over 14 years, according to new data from Paragon Bank.
Figures from the lender showed that average rental yields rose to 7.11% in April 2025, edging close to the 7.12% recorded in February 2011, the previous peak. The latest numbers follow a series of monthly increases seen during the first quarter of this year, up from 6.94% at the end of Q4 2024, which at the time was a 13-year high.
The bank attributed the rise to a combination of modest house price growth and continued rent inflation, supported by strong tenant demand and a shortage of homes in the private rental market. Compared to the same period in 2024, yields have improved by 40 basis points (bps), based on Paragon’s buy-to-let lending activity for both purchases and remortgages.
The long-term trend has been upwards since May 2017, when average yields were at a low of 4.91%.
“Our latest lending data highlights how average rental yields have continued to increase from the 13-year high we revealed at the end of last year,” said Russell Anderson (pictured), commercial director of mortgages at Paragon Bank.
“While the most recent economic instability caused by the threat of Trump’s tariffs is understandably impacting business confidence across many sectors, these figures offer tangible evidence that buy-to-let continues to offer strong returns for investors.
“This is particularly true where landlords employ a strategy of targeting properties that offer higher returns, houses in multiple occupation (HMOs) being the most obvious example, or investing in areas where property is relatively more affordable but benefits from the strong tenant demand we see all over the UK.”
Wales continued to deliver the highest average yields by region, rising to 8.43% in April 2025, up from 8.09% in December. Greater London remained at the other end of the spectrum, with landlords there achieving an average return of 5.78%, despite a 30bps increase over the same period.
By property type, more complex investments, such as HMOs, continued to outperform. HMOs produced an average yield of 8.50% in April, up from 8.41% at the end of 2024.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
