Recent data reveals a positive trend in the UK mortgage market, with landlord gross rental yields increasing by the end of June 2026. This marks a rise from the previous quarter, indicating a continued recovery in the buy-to-let sector since the end of the Covid lockdowns.
What are the key changes in rental yields?
According to Paragon’s Q2 buy-to-let yields report, overall gross rental yields have shown a steady upward movement since 2021. Scotland has seen the most significant growth, with yields rising. The West Midlands and Yorkshire & Humber also reported strong increases.
How do regional yields compare in the mortgage market?
While many regions have experienced growth, Greater London has faced a sharp decline. This trend contrasts with Wales, which remains the highest yielding location. Both Scotland and the North East have achieved notable yields, marking a significant improvement for landlords in those areas.
What this means for landlords and investors in the mortgage market
The rise in gross rental yields is encouraging for landlords and property investors, suggesting a more profitable rental market. However, those operating in Greater London may need to reassess their strategies due to the declining yields. The performance of different property types also highlights opportunities; Houses in Multiple Occupation (HMOs) remain the highest yielding, followed by multi-unit blocks. Landlords should consider diversifying their portfolios towards higher-yielding property types and regions.
Frequently asked questions
What factors are driving the increase in rental yields?
The increase in rental yields can be attributed to a recovering rental market post-Covid, with rising demand for rental properties in various regions, particularly outside London.
How should landlords respond to declining yields in London?
Landlords in London may need to explore alternative investment strategies, such as focusing on higher-yielding property types or considering investments in regions with stronger growth potential.