Landlords in the West Midlands are enjoying the highest rental yields in the UK, according to research from the specialist BTL lender, Paragon Mortgages.

The research shows that rental property in the West Midlands generated an average yield of 7.35%. The West Midlands region, which encompasses Birmingham, Wolverhampton, Coventry, Stoke and Worcester, is undergoing a renaissance, with the redevelopment of Birmingham city centre and a host of businesses creating jobs in the region, including Jaguar Land Rover and John Lewis. The region has a strong manufacturing base, as well as a growing professional services sector and a number of renowned universities.

Outer London followed with an average yield of 7.32%, the South West had a yield of 7.07% and the North West generated a yield of 6.97%.

The research also revealed that students remained the highest yielding tenant type with an average yield of 7.62%. At the other end of the scale, families with children and migrant workers generated yields, of 6.57% and 6.53% respectively.

Meanwhile, the research showed that Houses in Multiple Occupation (HMO) were the highest yielding property type for landlords with a yield of 7.56%. In this instance an HMO is defined as a property shared by three or more tenants who are not members of the same family and who share amenities, such as a hallway, kitchen or bathroom.

HMOs were followed by bungalows, providing an average yield of 6.99%, and flats (where the landlord owned the entire block) were third in line with a yield of 6.95%.

Nigel Terrington, Paragon Chief Executive, said: “It is interesting to see that the West Midlands is (currently) generating the highest yield. The area itself is a hub for manufacturing, has a strong professional services sector, is home to several large universities and is undergoing significant redevelopment.

“The region therefore attracts a healthy mix of tenant types, including students, young professionals, manual workers and economic migrants. All of which contributes to a healthy, regional private rental sector.”