Buy-to-let landlords across the UK are currently enjoying their most profitable era in over a decade, with average rental yields soaring to levels not seen since early 2011, according to fresh insights from Paragon Bank.

The data for April 2025 reveals that yields have climbed to an impressive 7.11%, narrowly trailing the peak of 7.12% logged in February 2011. This figure not only eclipses the previous recent high of 6.94% reached in the final quarter of 2024 but also represents a 40 basis point leap year-on-year—a clear sign of upward momentum in the rental market.

Driving this surge is a persistent supply-demand imbalance in the private rental sector. On one hand, tenant demand remains robust—arguably surging—while, on the other, the supply of rental homes continues to lag behind. This mismatch has created fertile ground for yield growth. Meanwhile, the cooling of house price inflation has further enhanced returns, enabling rental income to outpace the appreciation of property values.

A longer view of the trend paints an even more compelling picture. Since bottoming out in the aftermath of 2017—when yields dipped to just 4.91%—returns have been on a steady upward trajectory. Landlords, it appears, have adapted by recalibrating their portfolios and acquisition strategies to focus on assets with superior income-generating potential.

Russell Anderson, commercial director of mortgages at Paragon Bank, commented on the findings: “Our latest lending data highlights how average rental yields have continued to increase from the 13-year high we revealed at the end of last year. While the most recent economic instability caused by the threat of Trump’s tariffs is understandably impacting business confidence across many sectors, these figures offer tangible evidence that buy-to-let continues to offer strong returns for investors.”

Anderson also emphasized the advantage held by landlords who take a more strategic approach—particularly those investing in high-yield properties or regions with strong fundamentals: “This is particularly true where landlords employ a strategy of targeting properties that offer higher returns, HMOs being the most obvious example, or investing in areas where property is relatively more affordable but benefits from the strong tenant demand we see all over the UK.”

Regionally, the data reveals significant variation in yields. Wales emerged as the national leader, boasting an average return of 8.43%, a notable rise from 8.09% just four months prior. Close on its heels were Yorkshire & Humberside (7.97%), the North (7.94%), and the South West (7.93%). In contrast, Greater London—despite seeing a modest improvement of 30 basis points since December—continued to lag, posting the lowest average yield at 5.78%.

When dissected by property type, Houses in Multiple Occupation (HMOs) stood out once again. These properties delivered the strongest returns in the segment, with average yields climbing to 8.50%, up from 8.41% at the end of 2024.