Landlords see increased returns with an average yield of 6.72% in Q3 2024.
- Paragon Bank data highlights the consistent yield growth seen since 2022.
- The average yield saw a modest rise from 6.69% in the previous quarter.
- Limited rental stock and stabilised house price inflation boosted yields.
- Regionally, the North of England tops yield performance with a notable 8.02%.
In the third quarter of 2024, landlords experienced improved financial returns on their buy-to-let investments, as average yields rose to 6.72%. According to Paragon Bank, this marks a continued trend of yield growth from mid-2022, standing at 6.69% the previous quarter and 6.48% the year before.
This positive trend in yield performance is attributed to stabilised house price inflation and rising rental prices driven by limited rental stock. The average property value for buy-to-let investments was reported at £343,356, generating an annual rental income of £23,076, reflecting a strong market for investors.
When broken down by property type, houses in multiple occupation were the most lucrative, offering yields of 8.34%. Freehold blocks followed with yields of 6.66%, while flats and terraced houses delivered returns of 6.02% and 5.94%, respectively, showcasing the varying yield capabilities of different property types.
Regionally, landlords in the North of England achieved the highest yields, standing at an impressive 8.02%, closely followed by Wales at 7.95%. These figures contrast with Greater London, where yields were the lowest at 5.52%, illustrating significant regional disparities across the UK rental market.
Russell Anderson, commercial director at Paragon Bank, noted the strong demand for rental properties as a key driver of this yield performance. ‘Yield performance has been improving as house price inflation moderated, but the strong demand for rental property drove rental prices higher,’ he stated.
The encouraging upward trend in buy-to-let yields reflects a robust rental market and favourable investment conditions.
