Yields achieved by landlords increased in the third quarter of the year, continuing their strong performance from mid-2022, data from Paragon Bank has revealed.

Based on mortgage offer data for buy-to-let purchase and remortgage, the average yield hit 6.72% in September, up from 6.69% at the end of the second quarter of 2024 and 6.48% a year previously.

The yield – the proportion of rental income against the property value - at the end of the third quarter was based on the average buy-to-let property value of £343,356 and rental income of £23,076.

Yields have strengthened since the summer of 2022 as house price inflation stabilised and rents increased due to constrained availability of rental stock.

By property type, more complex property types achieved the highest yields. Houses in Multiple Occupation continued to generate the highest yields at 8.34%, followed by freehold blocks at 6.66%. Flats and terraced houses achieved yields of 6.02% and 5.94% respectively.

Regionally, landlords in the North of England (covering the North East and Cumbria) achieved the highest rental yields, at 8.02%, followed by Wales at 7.95%. Landlords in Greater London achieved the lowest yields at 5.52%.