Buy-to-let gross rental yields strengthened in the second quarter of the year, with Scotland, the West Midlands and Yorkshire and Humber driving the growth, according to data from Paragon Bank.
Paragon’s Q2 2026 Buy-to-Let Yields report, based on the bank’s lending data, found that overall gross rental yields strengthened to 7.02% by the end of June, compared with 6.96% at the end of Q1. Yields have been on an upward trajectory since the end of the Covid lockdowns, rising from 5.84% in 2021.
Regionally, Scotland experienced the strongest growth in yield performance over the quarter, rising by 53bps to 7.97%. Landlords in the West Midlands recorded a 24bps increase to 7.24%, while those in Yorkshire and Humber saw yields climb 21bps to 7.58%. Landlords in Greater London, by contrast, experienced the sharpest decline, with yields falling 16bps across the quarter to 5.58%.
Wales retained its position as the strongest-yielding location at 8.87%. Scotland’s strong increase pushed it into joint second place alongside the North East, with both regions now achieving yields of 7.97%. London (5.58%) and the South East (6.48%) kept their positions as the lowest-yielding regions.
By property type, HMOs remained the highest-yielding option at 8.90%, up 14bps over the quarter, followed by multi-unit blocks at 7.18%. Flats (6.45%) and terraced housing (6.31%) also scored highly on gross rental yield.
“The second quarter saw a further strengthening in gross rental yields, continuing the positive trajectory we have seen in recent years,” said Louisa Sedgwick, managing director of mortgages at Paragon Bank (pictured).
“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.
“Wales continues to lead the regional yield table, while Scotland, the West Midlands and Yorkshire and Humber all recorded notable quarterly improvements. HMOs also 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.”