Landlord gross rental yields rose to 7.02% in the three months from April to June this year, led by houses in multiple occupation (HMOs).

The latest data from Paragon Bank found Scotland, the West Midlands and Yorkshire and Humber are driving the growth.

These are the final quarterly figures before the Renters’ Rights Act was introduced.

The findings, based on Paragon’s own lending, reveals that yields improved compared with the first three months of 2026 when they stood at 6.96%.

Yields have been on an upward trajectory since the end of the Covid lockdowns, rising form 5.84% in 2021, Paragon Bank says.

By property type, HMOs remained the highest yielding type of property at 8.90%, up 0.14 percentage points, followed by multi-unit blocks at 7.18%. Flats currently have average yields of 6.45%, while terraced housing also scored highly at 6.31%.

Regionally, Scotland has experienced the strongest growth in yield performance during the three months from April to June, rising by 0.53 percentage points to 7.97%.

The overall picture remains one of resilient returns for landlords.”

Landlords in the West Midlands recorded a 0.24 percentage point increase to 7.24%, with those in Yorkshire & Humber increasing by 0.21 percentage points to 7.58%.

By contrast, landlords in Greater London experienced the sharpest decline in yields, falling 0.16 percentage points across the quarter to 5.58%.

Wales retained its position as the strongest yielding location at 8.87%, with Scotland’s strong increase resulted in it rising to joint second in the list with the North East, both achieving yields of 7.97%. London – at 5.58% – and the South East – at 6.48% – kept their position as the regions achieving the lowest yields.

HMOS LEAD

Louisa Sedgwick (pictured), Paragon Bank Managing Director of Mortgages, says: “The second quarter saw a further strengthening in gross rental yields, continuing the positive trajectory we have seen in recent years.

“While the pace of movement varies across regions, the overall picture remains one of resilient returns for landlords, supported by sustained tenant demand and more subdued house price growth in parts of the market.

“Wales continues to lead the regional yield table, while Scotland, the West Midlands and Yorkshire and Humber all recorded notable quarterly improvements. HMOs also remain the highest-yielding property type, underlining the importance of more specialist rental accommodation in delivering stronger income returns for landlords where there is clear local demand.”