East Midlands Leads UK Buy-to-Let Returns as Regional Rental Yields Top 8%

Regional divide emerges in UK buy-to-let returns

The East Midlands has emerged as the UK's strongest region for average buy-to-let rental yields, according to the latest analysis of Paragon Bank's Q3 2026 figures.

The region recorded an average gross yield of 8.10%, ahead of the North East at 8.02%, Scotland at 7.95% and the North West at 7.88%.

At the opposite end of the table, Greater London recorded an average yield of 5.79%.

The figures underline one of the most important trends for property investors in 2026: where a landlord buys can make a substantial difference to the income generated relative to the property's value.

East Midlands reaches 8.10%

Paragon's figures show that the East Midlands' average yield increased by 0.55 percentage points both quarter-on-quarter and year-on-year.

An 8.10% gross yield means that, theoretically, a £200,000 property producing that return would generate approximately £16,200 in annual rent.

That is £1,350 per month.

A property producing London's 5.79% average at the same £200,000 value would generate £11,580 annually.

But the comparison is illustrative: actual property prices and rents vary substantially between London and the East Midlands.

North East also crosses 8%

The North East followed closely at 8.02%.

Lower property purchase prices can help produce stronger percentage yields even where monthly rents are lower than those available in southern England.

This is one reason northern markets have attracted increasing attention from income-focused property investors.

However, regional averages should not be treated as investment recommendations.

Performance can differ significantly between neighbouring towns — and even between streets.

Scotland and North West remain competitive

Scotland's average yield reached 7.95%, while the North West recorded 7.88%.

Both therefore remain above the overall UK figure of 7.22%.

For investors considering Scotland, however, the regulatory and tenancy framework differs from England and Wales.

Legal requirements should therefore form part of the investment assessment alongside yield.

London produces lowest average yield

Greater London remained at the bottom of Paragon's regional ranking at 5.79%.

Nevertheless, London's figure improved by 0.23 percentage points compared with Q2 and 0.17 points compared with the same period of 2025.

The lower yield largely reflects the relationship between very high property values and rental income.

A London landlord may collect substantially more rent each month than an investor elsewhere but still achieve a lower percentage return on the property's value.

Why regional yields matter

Imagine two properties.

Property A

Purchase price: £160,000
Monthly rent: £1,080
Annual rent: £12,960
Gross yield: 8.1%

Property B

Purchase price: £400,000
Monthly rent: £1,930
Annual rent: £23,160
Gross yield: 5.79%

Property B generates considerably more rent in cash terms.

Property A, however, generates more rental income relative to the capital value of the property.

That distinction matters for investors deciding how efficiently their capital is being deployed.

Should investors simply buy in the highest-yield region?

No.

Rental yield is only one part of property analysis.

Investors should also investigate local employment, population changes, rental demand, vacancy levels, tenant demographics, property condition, licensing, transport and potential resale demand.

Capital growth also matters.

A lower-yielding property experiencing stronger long-term price appreciation could potentially outperform a higher-yield property with weak capital growth.

Neither outcome is guaranteed.

Regional figures versus city-level investment

Another important distinction is that these are regional figures.

The data does not establish that every city or town in the East Midlands will produce an 8.10% return.

Similarly, it does not mean every London investment will yield 5.79%.

Investors researching cities such as Nottingham, Leicester, Derby, Newcastle, Manchester or Glasgow need local property-price and rental evidence before making investment decisions.

That is particularly important when comparing conventional buy-to-let with HMOs or student accommodation.

Conclusion

The latest data strengthens the argument for looking beyond Britain's most expensive property markets when rental income is the primary investment objective.

The East Midlands at 8.10% and North East at 8.02% currently stand out in Paragon's data, while London remains considerably lower at 5.79%.

But the ranking should be the beginning of an investor's research — not the end.

The strongest investment is ultimately determined at property level, where purchase price, rent, financing, operating costs, tenant demand and future marketability come together.

For income-focused investors in 2026, regional diversification deserves serious consideration.