Average gross buy-to-let (BTL) yields reached 7.22% in Q3, the highest overall yield recorded since Q1 2011, Paragon Bank has reported.

The bank’s Q3 2026 Buy-to-Let Yields report showed gross yields increased by 0.22 percentage points from 7% quarter-on-quarter, while also rising by 0.28 percentage points annually.

Paragon said the figures "continue the strengthening of yields seen since 2022", driven by a combination of more subdued house price growth and continued demand for privately rented homes.

Regionally, landlords purchasing or remortgaging property in the East Midlands generated the highest average yield at 8.10%, marking a 0.55% increase both quarter-on-quarter and annually.

This was followed by the North East (8.02%), Scotland (7.95%) and the North West (7.88%). Greater London continued to generate the lowest average regional yield at 5.79%, although this was 0.23% higher than Q2 and 0.17% above Q3 2025.

By property type, Paragon found that HMOs still generated the highest average yield at 8.80%. Although this was 0.06% lower than the previous quarter, it represented annual growth of 0.37%. MUBs produced the second-highest yield at 7.36%, followed by flats (6.66%) and terraced homes (6.46%).

Managing director of mortgages at Paragon Bank, Louisa Sedgwick, stated: "BTL yields reaching their highest level since 2011 demonstrates the attractive returns that well-managed rental property can continue to generate.

"The increase reflects the balance between property values and rental income, with more subdued house price growth combining with strong demand for rented homes across many parts of the country.

"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."

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