During the third quarter of 2026, the average return generated from properties included in the bank’s buy-to-let offer data rose to 7.22%, the highest level recorded since the first quarter of 2011.
Paragon’s latest buy-to-let returns report showed total returns rose 0.22% from 7% in Q2 2026 and were 0.28 percentage points higher than the 6.94% recorded in Q3 2025.
Revenues have strengthened since 2022, according to Paragon, driven by a combination of weak house price growth and continued demand for privately rented homes.
Which areas have the highest returns?
The East Midlands has emerged as the place where landlords buying or remortgaging properties achieve the highest average returns. The figure here was 8.10%, which is 0.55% higher than the previous quarter and the same period last year.
Paragon revealed that the North East recorded the second highest average return at 8.02%, followed by Scotland at 7.95% and the North West at 7.88%.
Greater London continued to generate the lowest regional average return at 5.79%, although this was 0.23% higher than in Q2 and 0.17% higher than the corresponding period in 2025.
Which properties yielded the highest returns?
Paragon reported that homes with multiple occupations (HMO) continued to generate the highest average return of 8.80%. Although this was 0.06% lower than in the previous quarter, it represented year-over-year growth of 0.37%.
Multi-unit blocks produced the second highest yield at 7.36%, followed by apartments at 6.66% and terraced houses at 6.46%.
Apartments recorded the strongest annual growth among the property types analysed, with yields increasing by 0.40% compared to the third quarter of 2025. Yields on multi-unit blocks rose by 0.34% over the same period.
Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “Buy-to-let yields reaching their highest level since 2011 demonstrates the attractive returns that well-managed rental properties can continue to deliver.
“The increase reflects a balance between property values and rental income, with more subdued growth in house prices coupled with strong demand for rental homes in many parts of the country.”
She added: “The regional figures also show why landlords carefully consider local market conditions when investing. Areas with affordable property values and consistent demand from tenants can offer particularly attractive returns, as we are seeing in the East Midlands and across the north of England.”
