Paragon Bank revealed that in the fourth quarter of 2024, the average rental yield for landlords rose to its highest level since March 2011.
In December 2024, landlords achieved an average rent of 6.93%.
These figures indicate a 6.72% increase from the end of the third quarter of 2024 and a 30 basis points increase since the same period in 2023.
Paragon shows that this marks a continuation of yields since the mid-2022, with home prices stable inflation while rents continue to rise due to an intensified imbalance between supply of private homes and tenant demand.
On a regional basis, landlords with property in Wales achieved a maximum rate of return of 8.09%. Northwest along the Buy Sale (BTL) property generated a 7.84% yield, with landlords yielding 7.75%.
Landlords in Greater London achieved the lowest average rental yield of 5.48%.
Property types considered complex businesses often produce the highest returns on BTL investment.
Houses in multiple occupations generated the highest rate of return of 8.40%, followed by freehold of 7.28%, plains at 6.09%, and terraced houses at 6.05%.
“The average rental yield is 13 years higher, proving that the market is healthier than some believe,” said Russell Anderson, commercial director of Paragon Bank.
“Where landlords are strategically investing, buying in areas where homes are relatively affordable and targeting more complex real estate types, the purchase-to-sale volume will be huge rewarding.”
“This is a key component of demand, which has exceeded the supply of private homes for some time. This has led to a rise in market rents, which in turn helps to maintain strong yields, although home price inflation helps maintain strong yields.”
