Paragon Bank’s Q4 buy-to-let yields report showed flats ended the year at 6.33%, marking a 0.24 percentage point increase from the previous year

Rental yields across the UK delivered a steady performance in 2025, with flats and terraced homes leading growth among key property types, according to recent industry data.

Paragon Bank’s Q4 buy-to-let yields report showed flats ended the year at 6.33%, marking a 0.24 percentage point increase from the previous year. Terraced homes recorded similar strength, rising by 0.23 percentage points to 6.28%.

Houses in multiple occupation (HMOs) maintained the highest yields at 8.61% by year-end, up 0.20 percentage points year-on-year. Multi-unit blocks delivered the second-highest yield by property type at 7.32% in Q4 2025, followed by flats and terraced homes.

Wales emerged as the strongest-performing region, with yields jumping by 0.74 percentage points to 8.83%. The North East followed, with a 0.38 percentage point increase to 8.20%, while Greater London saw yields increase by 0.30 percentage points to 5.78%.

Overall average yields across the UK finished at 6.93%, broadly in line with 6.94% recorded in 2024 and 6.95% in Q3 2025.

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, said Louisa Sedgwick, managing director of mortgages at Paragon Bank.

While we saw this momentum ease last year as the market normalised, we expect yields to remain stable throughout this year, Sedgwick added.

Separate data from Fleet Mortgages painted a similar picture. The lender’s Q4 2025 Rental Barometer showed national average yields increased by 30 basis points year-on-year and 20 basis points quarter-on-quarter to reach 7.7%.

Average rental yields have continued to move in the right direction, both year-on-year and quarter-on-quarter, which will be welcome news for landlords, said Steve Cox, chief commercial officer at Fleet Mortgages.