Average gross buy-to-let (BTL) rental yields increased from 6.92% in Q4 2025 to 6.96% in Q1 this year, with Wales and the North East outperforming other locations.
Paragon’s Q1 2026 Buy-to-Let Yields report found that the average rental yield in Wales was 8.74% in Q1, while landlords in the North East enjoyed returns of 8.1%.
Despite the stronger yields, these represented marginal falls of 0.04% and 0.09% respectively, when compared to the yields seen during the previous quarter.
The locations were followed by the North West, generating an average rental yield of 7.87%, the East Midlands at 7.58%, and Yorkshire and the Humber at 7.45%.
The South East and Greater London were the only regions with yields below average, at 6.4% and 5.74% respectively in Q1. While the South East saw a 0.13% improvement in rental yields, these fell by 0.06% in Greater London.
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HMOs and MUBs generate higher yields
Houses in multiple occupation (HMOs) and multi-unit blocks (MUBs) were the property types generating the largest returns, at 8.78% and 7.48% respectively.
Compared to Q4, HMOs were attracting 0.17% more in average rental yields and returns on MUBs were 0.21% stronger.
Average rental yields generated by flats and terraced houses both rose 0.03% since Q4, coming to 6.34% and 6.3% respectively in Q1.
Detached houses generated the smallest yields, at 4.6%, a 0.06% improvement on the previous quarter.
Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “Yields have started 2026 on a positive footing, edging up slightly. This reflects the slightly flat housing market during the quarter against tenant demand that is still strong, despite easing over the past 12 months.
“HMOs, MUBs and semi-detached homes have particularly seen healthy yield increases over the period, while regionally Wales and the North East continue to generate the strongest returns. We’re seeing robust demand in student markets in Wales, particularly, which is underpinning the strength of this market.”