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Rental Yields Soar: Flats and Terraces Shine

  • Writer: Sarah Ruivivar
    Sarah Ruivivar
  • Jan 26
  • 1 min read

The latest data from Paragon Bank reveals a delightful surprise for landlords: rental yields in 2025 have outperformed last year, with flats and terraced homes leading the charge.


Flats ended the year with a yield of 6.33%, up by 0.24 percentage points, while terraced homes rose by 0.23 percentage points to 6.28%.


But hold onto your hats, because Houses in Multiple Occupation (HMOs) stole the show with a whopping 8.61% yield, marking a 0.20 percentage point increase. Regionally, Wales and the North East were the stars, with yields climbing to 8.83% and 8.20%, respectively.


Greater London also had a moment in the spotlight, with yields increasing by 0.30 percentage points to 5.78%. Overall, the UK's average yield wrapped up at 6.93%, maintaining a steady course from the previous year.


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Multi-unit blocks followed HMOs with a yield of 7.32%, while regionally, the North West, East Midlands, and Yorkshire & Humber also delivered impressive returns.


Louisa Sedgwick, Paragon Bank's Managing Director of Mortgages, attributes this robust performance to the cooling of house price growth and the surge in rental inflation. While the market has steadied, Sedgwick predicts yields will remain stable throughout the year. So, keep your eyes peeled and your investments sharp!


Want to hear more? Join Mal & Matt on the Property AI Report Podcast each week!

Access from your preferred podcast provider by clicking here



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