Buy-to-let yields reached a 15-year high in Q3 2026, Paragon Bank data shows, but regulatory and tax headwinds are testing landlord resilience
Buy-to-let gross rental yields have climbed to their highest point since 2011, according to Q3 2026 data from Paragon Bank. The average hit 7.22% — up from 7.00% in Q2 2026 and 0.28 percentage points above the 6.94% recorded a year earlier.
Paragon attributes the gain to subdued house price growth and sustained demand for privately rented homes, a trend building since 2022.
For brokers advising landlord clients, the figures carry weight. They emerge at a moment when the sector faces its most concentrated period of policy change in decades. The income case is arguably the strongest argument for staying in.
Which UK regions are generating the strongest buy-to-let yields?
The East Midlands led the regional table at 8.10%, up 0.55 percentage points both quarter-on-quarter and year-on-year. The North East generated the second-highest average at 8.02%, followed by Scotland at 7.95% and the North West at 7.88%.
Greater London remained the lowest-yielding region at 5.79%, edging up 0.23 percentage points on the previous quarter. That gap between acquisition costs and rental income is a structural feature of the London market.
| Region | Q3 2026 | vs Q2 2026 | vs Q3 2025 |
|---|---|---|---|
| East Midlands | 8.10% | +0.55pp | +0.55pp |
| North | 8.02% | +0.08pp | −0.15pp |
| Scotland | 7.95% | −0.03pp | +0.38pp |
| North West | 7.88% | +0.12pp | +0.13pp |
| South West | 7.79% | +0.42pp | −0.01pp |
| Wales | 7.79% | −0.04pp | −0.06pp |
| East Anglia | 7.53% | +0.59pp | +0.14pp |
| West Midlands | 7.38% | +0.10pp | +0.16pp |
| South East | 6.58% | +0.10pp | +0.14pp |
| Greater London | 5.79% | +0.23pp | +0.17pp |
Source: Paragon Bank, Q3 2026 Buy-to-Let Yields report
By property type, houses in multiple occupation (HMOs) continued to outperform. They produced an average yield of 8.80% in Q3 — annual growth of 0.37 percentage points despite a marginal 0.06 point dip from Q2. Multi-unit blocks came in second at 7.36%, with flats at 6.66% and terraced homes at 6.46%.
Why HMOs are drawing broker interest
The HMO picture has become a recurring theme in professional landlord strategy. As the shift towards HMOs accelerates among specialist landlords, the Paragon data underlines why. The spread between HMOs and standard properties is substantial. Brokers who can place these cases are increasingly sought after by clients building yield-focused portfolios.
“Buy-to-let yields reaching their highest level since 2011 demonstrates the attractive returns that well-managed rental property can continue to generate,” said Louisa Sedgwick, managing director of mortgages at Paragon Bank.
“The regional figures also show why landlords carefully consider local market conditions when investing. Areas with more affordable property values and sustained tenant demand can offer particularly attractive yields, as we see in the East Midlands and across the north of England.”
| Property type | Q3 2026 | vs Q2 2026 | vs Q3 2025 |
|---|---|---|---|
| HMO | 8.80% | −0.06pp | +0.37pp |
| Multi-unit block | 7.36% | +0.16pp | +0.34pp |
| Flat | 6.66% | +0.22pp | +0.40pp |
| Terraced | 6.46% | +0.16pp | +0.21pp |
| Semi-detached | 5.75% | −0.04pp | +0.18pp |
| Bungalow | 5.23% | +0.19pp | +0.18pp |
| Detached | 4.77% | +0.07pp | +0.02pp |
Source: Paragon Bank, Q3 2026 Buy-to-Let Yields report
What does the Renters’ Rights Act mean for buy-to-let landlords?
Strong yields sit against a backdrop of structural change. The Renters’ Rights Act became law in October 2025. Its first phase came into force on 1 May 2026, abolishing Section 21 no-fault evictions and replacing assured shorthold tenancies with periodic agreements across England.
A second phase, including a mandatory national landlord database and ombudsman, is expected later in 2026.
The legislative changes prompted some landlords to reassess whether to remain in the market. A Simply Business survey of more than 1,000 landlords in August 2025 found almost two in five feared the Act would force them out.
For brokers, that attrition has direct pipeline implications. Landlords who remain are facing unavoidable compliance conversations; those with knowledgeable advisers are more likely to stay active borrowers.
Tax headwinds compound the pressure. Following the 2024 Autumn Budget, the stamp duty surcharge on additional properties rose from 3% to 5%. Capital gains tax on residential property tightened from April 2025. Entry costs are materially higher; exit has become more complex under the new possession grounds.
The income case for buy-to-let has rarely looked stronger on paper. Yet the combined compliance and tax burden continues to weigh on marginal decisions. Brokers who can hold both parts of that conversation are better positioned to retain and grow their landlord book.
