Flats and terraced houses achieved the strongest growth in gross rental yield for landlords by 2025, new data from Paragon Bank shows.
The buy-to-let mortgage provider also found that Wales and the North East were the areas with the best performing returns.
A report published today by Paragon shows that apartment yields ended the year at 6.33%, 0.24 percentage points (pp) higher than the same point the year before, while terraced houses were 0.23pp higher at 6.28%.
The data shows that multi-occupancy homes achieved the highest returns at 8.61% at the end of 2025, an increase of 0.20 percentage points from a year earlier.
In Wales, meanwhile, yields rose by 0.74 to 8.83%. This was closely followed by the North East, where yields rose by 0.38 to 8.20%. Yields in Greater London also performed well, rising from 0.30 to 5.78%.
Overall, average interest rates in Britain ended the year at 6.93%, largely in line with the same period in 2024 (6.94%) and the third quarter of 2025 (6.95%), according to Paragon.
Louisa Sedgwick, director of Mortgages 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.”
She added: “While overall return growth was relatively flat through 2025, certain property types and regions stood out, reflecting varied local market conditions and shifting demand for specific types of housing.”