Editor's note: This brief was summarised by The Property AI Newsroom from a report by PropertyWire. Read the original article for full details.

HMO Properties Push UK Landlord Yields Above 7% in Q2 2026

UK landlords saw average gross rental yields reach 7.02% in the second quarter of 2026, according to data from Paragon Bank. Houses in multiple occupation (HMOs) were the highest-yielding property type, with yields of 8.90%.

The figures, based on Paragon Bank’s lending portfolio, show an increase from 6.96% in the first quarter of 2026. This data represents the final quarterly update before the introduction of the Renters’ Rights Act. Since the end of Covid lockdowns in 2021, when yields stood at 5.84%, there has been a steady rise in returns for landlords.

Property Type Performance

HMOs maintained their position as the top-performing property type, with yields rising by 0.14 percentage points quarter-on-quarter to 8.90%. Multi-unit blocks recorded yields of 7.18%, flats averaged 6.45%, and terraced housing achieved 6.31%.

Regional Variations

Scotland experienced the strongest quarterly growth, with yields rising by 0.53 percentage points to 7.97%. The West Midlands saw yields increase by 0.24 percentage points to 7.24%, while Yorkshire and Humber recorded a 0.21 percentage point rise to 7.58%. Wales retained the highest regional yield at 8.87%. Scotland and the North East jointly occupied second place at 7.97%.

Greater London recorded the sharpest decline, with yields falling by 0.16 percentage points to 5.58%. The South East remained the second-lowest yielding region at 6.48%. The report notes that regional disparities reflect varying house price growth across the UK, with higher yields typically found in areas where property values have remained more subdued.

Sector Outlook

The data provides a benchmark for the buy-to-let sector as it approaches the implementation of the Renters’ Rights Act, which is expected to impact landlord strategies and portfolio composition in the coming months.

For letting agents and inventory clerks, these trends highlight the continued importance of HMOs and regional market differences in shaping landlord returns and property management priorities.