Flats and terraced houses achieved the strongest gross rental yield growth for landlords in 2025, with Wales and the North East performing best regionally, Paragon reveals.
The lender’s fourth-quarter buy-to-let (BTL) yield report shows that apartment yields ended the year at 6.33%, 0.24% higher than at the same point last year, while terraced houses were 0.23% higher at 6.28%.
Houses with multiple occupancy achieved the highest returns of 8.61% at the end of 2025, an increase of 0.20% compared to a year earlier.
The report also shows that regional yields in Wales increased by 0.74% to 8.83%, followed by the North East by 0.38% to 8.20%. Yields in Greater London also performed well, rising 0.30% to 5.78%.
Overall, the average interest rate in Britain ended the year at 6.93%, largely in line with the same period in 2024 when it was 6.94% and in the third quarter of 2025 when it was 6.95%.
After healthcare institutions, multi-family residential blocks achieved the second highest return per property type, at 7.32% in the fourth quarter of 2025, followed by apartments and terraced houses.
Regionally, Wales was the location with the highest yield, followed by the North West (7.80%), the East Midlands (7.69%) and Yorkshire & Humber (7.68%).
Louisa Sedgwick, mortgage director at Paragon Bank, said: “Yields have performed strongly since the summer of 2022, when house price growth began to slow and rental inflation accelerated due to the supply-demand imbalance.”
“While we saw this momentum slow last year as the market normalized, we expect rates to remain stable this year.”
“While overall yield growth was relatively flat through 2025, certain property types and regions stood out, reflecting varied local market conditions and shifting demand for specific housing types.”