The buy-to-let (BTL) specialist lender said that the highest average yields achieved by landlords are in the North East, at 8.13%.
In second place is Wales, where landlords can see returns of 8.07%, followed by the North West in third place with average returns of 7.84%.
Another Northern region, Yorkshire and the Humber, also offers yields above the England, Scotland and Wales average of 7.17%.
Average rental yields by region
North East – 8.13%
Wales – 8.07%
North West – 7.84%
Yorkshire and the Humber – 7.54%
Scotland – 7.45%
South West – 7.44%
East Anglia – 7.18%
West Midlands – 6.82%
East Midlands – 6.74%
South East – 6.25%
Greater London – 5.56%
Cost of property impacts yields
A key component of the North’s yield performance is the relative affordability of property, said Paragon.
The Office for National Statistics’ (ONS’) Housing affordability in England and Wales report reveals that the most affordable local authorities in 2023 were in the North East, North West and Yorkshire and the Humber.
Louisa Sedgwick, Paragon Bank’s managing director of mortgages, said: “Our latest report draws on industry data to reveal that, during the last decade, the North of England has surpassed the South in terms of the proportion of buy-to-let home purchases.
“I think one of the reasons why the region has increasingly gained the attention of landlords is the opportunity to generate strong returns on investment.
“Demand for rented homes is high in the North, as it is across the UK, and with property that can be significantly more affordable to buy compared to Southern regions, landlords are able to respond, confident that they will be able to achieve above average yields.”
