UK rental yields hit 13-year high at 6.93%

Average UK rental yields have climbed to 6.93%, their highest level in more than 13 years, as rental growth continues to outpace house price growth. The data points to continued strength in the private rental market and stronger returns in regions including the North West and Wales.

Why it matters: - Higher rental yields can improve returns for landlords and property investors. - The latest figures suggest the UK private rental sector is still being supported by strong tenant demand and limited supply. - For overseas buyers and UK expats, stronger yields may make regional UK property markets more attractive when assessing potential income from rentals.

What happened: - Paragon Bank's latest Rental Yield Report puts average UK rental yields at 6.93%, the highest level in 13 years. - The increase was driven by rental growth continuing to outpace house price growth in many parts of the UK. - The report says the North West recorded average yields of 7.84%. - Wales posted average yields of 8.09%. - Houses in Multiple Occupation, or HMOs, achieved average yields of 8.4%.

The details: - Rental stock remains below pre-pandemic levels, adding pressure to rents across many regions. - Tenant demand has increased significantly over recent years, Paragon Bank reports. - Rightmove has said rental enquiries remain substantially higher than before the pandemic. - The report frames specialist investment strategies, including HMOs, as a source of stronger yields for experienced landlords. - Regional markets with relatively affordable property prices and strong tenant demand may offer attractive opportunities, depending on an investor's goals and circumstances. - Specialist mortgage brokers can help overseas buyers access lending products designed for expats and foreign national investors. - Investors still need to weigh rental income, financing costs and long-term investment goals before buying.

Between the lines: - The yield rise reflects a market where rents are rising faster than property values, which can lift income returns even if prices stay firm. - The strongest yields appear in regions and property types that balance lower entry prices with resilient demand. - The data also underscores a continuing mismatch between rental supply and tenant demand, which is keeping the sector tight.

What's next: - Rental yields will likely stay closely tied to the pace of rent growth, housing supply and local property prices. - Overseas investors and expats considering UK property are likely to keep focusing on regions with stronger yields and accessible financing options. - Prospective buyers should seek professional financial and mortgage advice before making purchase decisions.