Landlords in the North East are pocketing the highest rental yields in the UK, according to Paragon Bank’s latest lending data.

With average yields of 8.13%, the region tops Paragon’s rental yield table, with Wales - where landlords can generate returns of 8.07% - coming in a close second, followed by the North West where buy-to-let properties deliver average returns of 7.84%.  

Yorkshire & Humber also offers yields of 7.54%, above the England, Scotland and Wales average of 7.17%, helped by the north’s relative affordability of property.

The Office for National Statistics’ 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 & Humber.  

Annual salary

Homes bought in England and Wales last year commanded 8.3 and 6.1 times a full-time employee’s annual salary, respectively. Across the three northern England regions, only four local authorities had ratios above eight, while the North East was the most affordable local authority overall. London, where eight in 10 local authorities have affordability ratios above 12, was the least affordable region.  

Louisa Sedgwick (pictured), Paragon Bank’s managing director of mortgages, says the north of England has surpassed the south in terms of the proportion of buy-to-let home purchases during the last decade.

“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,” adds Sedgwick.

“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.”