West Midlands tops rental yield table

Paragon attributed the strong yields to the “renaissance” which the West Midlands was experiencing with the redevelopment of Birmingham city and a host of businesses creating jobs in the region including Jaguar Land Rover and John Lewis.

Outer London followed with an average yield of 7.32%, the South West had a yield of 7.07% and the North West generated a yield of 6.97%.

The research also revealed that students remained the highest yielding tenant type with an average yield of 7.62%. Paragon stated that students provided attractive yields as property was typically let on a per room basis and benefit from parental guarantees.

At the other end of the scale, families with children and migrant workers generated yields, of 6.57% and 6.53% respectively.

Houses in Multiple Occupation were the highest yielding property type for landlords with a yield of 7.56%.

HMOs were followed by bungalows providing an average yield of 6.99%, and flats where the landlord owned the entire block were third in line with a yield of 6.95%.

Nigel Terrington, chief executive at Paragon, said: “The yield a rental property generates is a hugely important part of a landlord’s business plan, as they give a good indication of how well the property is performing and the level of income it is providing.

“It is interesting to see that the West Midlands is generating the highest yield. The area itself is a hub for manufacturing, has a strong professional services sector, is home to several large universities and is undergoing significant redevelopment. All of which contributes to a healthy, regional private rental sector.”

Paragon worked with market research specialists BDRC Continental to survey nearly 600 landlords across the UK during September via the Paragon Mortgages and Mortgage Trust brands.