Flats and terraced homes achieved the strongest gross rental yield growth for landlords in 2025 according to Paragon Bank.

Wales and the North East were the best performing regions, with yields in Wales growing by 0.74pp (percentage points) to 8.83%, followed by the North East, up 0.38pp to 8.20%. Yields in Greater London also performed well, increasing 0.30pp to 5.78%.

Louisa Sedgwick, Paragon Bank Managing Director of Mortgages, said: “Yields have performed strongly since summer 2022, when house price growth began to slow and rental inflation accelerated due to the imbalance between supply and demand. While we saw this momentum ease last year as the market normalised, we expect yields to remain stable throughout this year.

Overall, average yields across the UK finished the year at 6.93%, broadly in line with the same period in 2024 (6.94%) and Q3 2025 (6.95%).

Sedgwick said: “Although overall yield growth was relatively flat in 2025, certain property types and regions stood out, reflecting varied local market conditions and shifting demand for specific kinds of homes.”

Yields on flats finished the year at 6.33%, 0.24 percentage points (pp) higher than the same point the previous year, with terraced homes 0.23pp higher at 6.28%. Houses in Multiple Occupation (HMOs) achieved the highest yields at the end of 2025 at 8.61%, up 0.20pp on a year previously.