Landlords with property in Wales achieved an average gross yield of 8.84% at the end of September, compared to 8.59% in the second quarter. Paragon’s buy-to-let lending data showed that yields in Wales have risen since the first quarter of 2023, when they stood at 7.13%.
Yields in the North East also strengthened during the quarter, finishing the period at 8.16%, up from 8.10% in Q2. The North West and South West both finished the quarter with yields of 7.81%, holding joint third position, with the Yorkshire and Humber achieving 7.80%. Landlords in Greater London generated the lowest yield at 5.65%, followed by the South East at 6.49%.
Yields in Wales also saw the highest annual increase, rising by 0.86 basis points compared to Q3 2024. Other regions which recorded strong annual yield growth included the East Midlands (+77bp), West Midlands (+42bp) and East Anglia (+35bp).
With university students heading off to start the new academic year during September, student yield property yields continued to outperform non-student property. Landlords with property in student postcodes generated an average yield of 7.31%, up from 7.17% at the start of the 24/25 academic year, compared to 6.65% in non-student postcodes.
Overall, yields eased slightly from the 14-year high of 7.12% recorded during the second quarter of the year to 6.97% at the end of the third quarter.
By property type, yields for HMO property firmed up during the quarter, rising by 0.04 percentage points to 8.48%. Terraced property also rose to 6.27%, with flats unchanged at 6.28%.
Louisa Sedgwick, Paragon Bank managing director of mortgages, says: “With 30 years of buy-to-let lending data, we are in a unique position to offer insight into landlord trends. Typically, regions with lower average property values and sustained high levels of tenant demand are generating higher yields. We see this clearly across northern England and Wales and that is reflected in landlord demand for new properties in those locations.”
She adds: “Student property has always been popular with landlords and that is reflected in both higher yields generated in known student postcodes and HMO properties that typically house students from their second year onwards. We expect this to continue to be the case despite uncertainty over university funding, particularly driven by domestic students.”
| Region | Yield | Vs Q3 2024 |
| Wales | 8.84% | +0.86bp |
| North East | 8.16% | +0.13bp |
| North West | 7.81% | -0.08bp |
| South West | 7.81% | +0.22bp |
| Yorkshire & Humber | 7.80% | +0.17bp |
| Scotland | 7.57% | +0.08bp |
| East Midlands | 7.53% | +0.77bp |
| East Anglia | 7.39% | +0.35bp |
| West Midlands | 7.24% | +0.42bp |
| South East | 6.49% | +0.24bp |
| Greater London | 5.65% | +0.14bp |
| Property type | Yield |
| HMO | 8.48% |
| Freehold block | 7.05% |
| Flat | 6.28% |
| Terraced | 6.27% |
| Semi-detached | 5.58% |
| Bungalow | 5.04% |
| Detached | 4.76% |
This article is taken from Landlord Today