Average landlord gross rental yields in the UK reached 7.02% in the second quarter of 2026, according to data from Paragon Bank, with houses in multiple occupation (HMOs) leading the growth.
The figures, based on Paragon’s lending portfolio, show an increase from 6.96% in the first quarter of 2026 and represent the final quarterly data released before the introduction of the Renters’ Rights Act. Yields have risen steadily since the end of Covid lockdowns, when they stood at 5.84% in 2021.
Property type performance
HMOs maintained their position as the highest-yielding property type at 8.90%, up 0.14 percentage points quarter-on-quarter. Multi-unit blocks recorded yields of 7.18%, while flats averaged 6.45% and terraced housing achieved 6.31%.
Regional variations
Scotland experienced the strongest quarterly growth, with yields rising 0.53 percentage points to 7.97%. The West Midlands saw yields increase by 0.24 percentage points to 7.24%, while Yorkshire and Humber recorded a 0.21 percentage point rise to 7.58%.
Wales retained the highest regional yield at 8.87%, with Scotland and the North East jointly occupying second place at 7.97%. Greater London recorded the sharpest decline, falling 0.16 percentage points to 5.58%, while the South East remained the second-lowest yielding region at 6.48%.
The regional disparities reflect varying house price growth across the UK, with higher yields typically found in areas where property values have remained more subdued.
Louisa Sedgwick, Managing Director of Mortgages at Paragon Bank, said: “The second quarter saw a further strengthening in gross rental yields, continuing the positive trajectory we have seen in recent years. While the pace of movement varies across regions, the overall picture remains one of resilient returns for landlords, supported by sustained tenant demand and more subdued house price growth in parts of the market.”
She added that HMOs “remain the highest-yielding property type, underlining the importance of more specialist rental accommodation in delivering stronger income returns for landlords where there is clear local demand.”
The data provides a benchmark for the buy-to-let sector as it enters a period of regulatory change, with the Renters’ Rights Act expected to impact landlord strategies and portfolio composition in the coming months.