Buy-to-let yields hit a 15-year high: what 7.22% means for landlords

The short answer

Buy-to-let yields are at their highest level in more than 15 years. Paragon Bank's latest figures put the average gross yield at 7.22% for July to September 2026, the highest since early 2011. Yields are highest in the East Midlands and the North, and lowest in London. HMOs remain the highest-yielding property type.

A gross yield is the rent before any costs. It is a useful way to compare areas, but it is not what you keep. Before you buy on the strength of these figures, work out what is left after the mortgage, fees, empty months, repairs and tax.

Key facts

• The average gross buy-to-let yield was 7.22% in the third quarter of 2026, up from 7.00% in the second quarter and 6.94% a year earlier. Mortgage Strategy

• That is the highest average since the first quarter of 2011, according to Paragon Bank. Mortgage Solutions

• The East Midlands had the highest regional yield at 8.10%, and Greater London the lowest at 5.79%. Mortgage Strategy

• HMOs had the highest yield of any property type at 8.80%. Flats saw the strongest annual growth, up 0.40 percentage points to 6.66%. Mortgage Solutions

• The figures come from landlords buying or remortgaging with Paragon, so they describe new lending, not every rental home in the UK. what MORTGAGE

What is a gross yield?

Gross yield is the year's rent as a percentage of the property's value:

• Formula: annual rent ÷ property value × 100

• Example: £900 a month is £10,800 a year. On a £150,000 flat, that is a gross yield of 7.2%.

It does not take off anything you pay out. That makes it quick to compare one area or property with another, but it can make a deal look better than it is.

Where are yields highest?

Paragon's regional figures for July to September 2026:

• East Midlands: 8.10%, up 0.55 percentage points on both the previous quarter and a year ago

• North East: 8.02%

• Scotland: 7.95%

• North West: 7.88%

• South West: 7.79%

• Wales: 7.79%

• East Anglia: 7.53%, the biggest rise on the previous quarter (up 0.59 points)

• Greater London: 5.79%, the lowest region

Paragon's explanation is simple. Louisa Sedgwick, its managing director of mortgages, said that "areas with more affordable property values and sustained tenant demand can offer particularly attractive yields". Where prices are lower, the same rent is a bigger share of what you paid.

Which property types yield the most?

• HMOs: 8.80%, slightly down on the previous quarter but up 0.37 points on a year ago

• Multi-unit blocks: 7.36%

• Flats: 6.66%, the strongest annual growth

• Terraced houses: 6.46%

• Detached houses: 4.77%, the lowest

HMOs earn more because rent is charged per room. They also cost more to run: licensing, fire safety, furnished rooms, bills and more tenant turnover. Check the HMO licensing rules for your council before you count on the higher yield.

Why gross yield isn't what you keep

Take the same £150,000 flat let at £900 a month, bought with a 75% interest-only mortgage at 5.5%:

• Rent: £900 a month

• Mortgage interest: £516 a month (£112,500 at 5.5%)

• Letting agent at 10%: £90 a month

• Allowance for empty months: £52 a month (5.77% of the rent)

• Left each month: £242, or about £2,900 a year

To buy it, you would need a £37,500 deposit and £8,000 of stamp duty at the higher rates for additional properties in England, so about £45,500 before legal and mortgage fees. That puts the return on the cash you put in at roughly 6%, and that is before repairs, insurance, safety certificates, licensing and tax.

Tax matters more than many landlords expect. Individual landlords cannot deduct mortgage interest from rental income; they get a basic-rate tax credit instead. Keeping a clear record of every allowable expense is the simplest way to make sure you pay no more than you need to.

There are new costs coming in England too. The landlord database will charge £65 per property per year, and the Renters' Rights Act changes how you end tenancies and raise rent. Build both into your numbers.

How to check a deal before you buy

1. Start with the local rent, not the asking rent. Compare the advertised rent with what similar homes nearby actually let for.

2. Work out the gross yield, then compare it with the area. A deal well below the local average needs a good reason, such as the chance to add value.

3. Take off the mortgage at today's rate. Use the rate you would actually be offered, not the rate on your existing loans.

4. Allow for empty months and management. Even if you self-manage, put a value on your time.

5. Add the cash you need up front. Deposit, stamp duty, fees and any work before the first tenant moves in.

6. Stress-test it. Ask what is left if the rate rises by 1 point or the property sits empty for 2 months.

What to do next

High yields are good news for landlords, but the deal that works is the one that still works after costs. If you are weighing up a purchase, run the numbers for that address, not the regional average.

With AskPortfoliq you can send an address on WhatsApp, Telegram or the web assistant and get an investment report back: the gross yield against the local market, monthly cashflow after the mortgage, voids and management, stamp duty, and the cash you would need. If you buy, the property moves straight into your portfolio, so rent, costs and compliance are tracked from day one.

To track the rent you already collect, download the free rent income spreadsheet.