THE PROPERTY FILTER TAKE
UK landlord gross rental yields reached 7.02% in Q2 2026, with HMO (House in Multiple Occupation) properties leading at 8.90% - up from 6.96% just three months earlier, per Paragon Bank.
For landlords, HMO income is outperforming single-let alternatives by a significant margin; for tenants in shared housing, rising investor interest in the model could tighten room supply and push rents higher.
If you are reviewing your portfolio mix, you may wish to run the numbers on HMO conversion using a dedicated valuation tool before committing to any structural changes.
UK landlord gross rental yields averaged 7.02% in the second quarter of 2026, according to data from Paragon Bank, up from 6.96% in Q1. HMO (House in Multiple Occupation) properties led every other property type at 8.90%, continuing a run of strong returns that is pulling investor attention firmly towards multi-let strategies.
Why HMOs Are Pulling Ahead
The gap between HMOs and standard single-let properties is widening. Multi-unit blocks came in at 7.18% per Paragon Bank, while flats recorded 6.45% and terraced housing 6.31%. That puts HMOs roughly 2.5 percentage points ahead of a typical terrace.
The reason is structural. HMOs generate multiple rental incomes from a single asset, which spreads void risk. If one room empties, three or four others continue producing income. For tenants, this means room-by-room demand is intense in most markets, and waiting lists for well-managed shared houses in commuter cities remain long.
Considering a conversion? You may wish to use Property Filter's HMO valuation calculator to sense-check the numbers before instructing a solicitor.
Where Yields Are Rising - and Falling
Geography is dividing the picture sharply. Wales held the highest regional yield at 8.87% per Paragon Bank, with Scotland and the North East jointly at 7.97%. The West Midlands climbed 24 basis points quarter-on-quarter to 7.24%, and Yorkshire and Humber rose 21 basis points to 7.58%.
Greater London moved in the opposite direction. Yields there fell 16 basis points to 5.58%, the lowest of any UK region. High purchase prices are compressing returns even as rents remain high. Tenants in London are not getting a cheaper deal - the cost simply is not translating into better returns for landlords at current valuations.
For investors weighing a northern acquisition, understanding the full stress-tested picture matters. Property Filter's rental stress test calculator models net yield after voids, maintenance, and finance costs - worth running before any offer goes in.
The Renters' Rights Act Context
These figures carry extra weight as the last full quarterly dataset before the Renters' Rights Act beds in. Landlords should note that the Act removes fixed-term tenancies and introduces new grounds for possession - changes that affect void risk modelling and how portfolio performance is projected.
HMO landlords will need to consider how rolling tenancies interact with licence conditions and room-by-room letting. Your tenants will benefit from stronger security of tenure, which may actually reduce your void rate if managed well. For a broader view of how to position a portfolio under the new rules, Property Filter's investment strategies guide covers the main approaches across different property types.
Yields have climbed steadily from their post-COVID low of 5.84% in 2021, per Paragon Bank, a gain of more than 1.1 percentage points over five years.
Key Takeaways
UK gross rental yields averaged 7.02% in Q2 2026, up from 6.96% in Q1 (Paragon Bank)
HMO properties led all property types at 8.90%, roughly 2.5 percentage points ahead of terraced housing at 6.31%
Wales delivered the highest regional yield at 8.87%; Greater London recorded the lowest at 5.58%
Scotland and the North East jointly posted 7.97%, with the West Midlands rising to 7.24%
Yields have climbed from 5.84% in 2021, a gain of over 1.1 percentage points across five years (Paragon Bank)
UK landlord gross rental yields averaged 7.02% in the second quarter of 2026, according to data from Paragon Bank, up from 6.96% in Q1. HMO (House in Multiple Occupation) properties led every other property type at 8.90%, continuing a run of strong returns that is pulling investor attention firmly towards multi-let strategies.
Why HMOs Are Pulling Ahead
The gap between HMOs and standard single-let properties is widening. Multi-unit blocks came in at 7.18% per Paragon Bank, while flats recorded 6.45% and terraced housing 6.31%. That puts HMOs roughly 2.5 percentage points ahead of a typical terrace.
The reason is structural. HMOs generate multiple rental incomes from a single asset, which spreads void risk. If one room empties, three or four others continue producing income. For tenants, this means room-by-room demand is intense in most markets, and waiting lists for well-managed shared houses in commuter cities remain long.
Considering a conversion? You may wish to use Property Filter's HMO valuation calculator to sense-check the numbers before instructing a solicitor.
Where Yields Are Rising - and Falling
Geography is dividing the picture sharply. Wales held the highest regional yield at 8.87% per Paragon Bank, with Scotland and the North East jointly at 7.97%. The West Midlands climbed 24 basis points quarter-on-quarter to 7.24%, and Yorkshire and Humber rose 21 basis points to 7.58%.
Greater London moved in the opposite direction. Yields there fell 16 basis points to 5.58%, the lowest of any UK region. High purchase prices are compressing returns even as rents remain high. Tenants in London are not getting a cheaper deal - the cost simply is not translating into better returns for landlords at current valuations.
For investors weighing a northern acquisition, understanding the full stress-tested picture matters. Property Filter's rental stress test calculator models net yield after voids, maintenance, and finance costs - worth running before any offer goes in.
The Renters' Rights Act Context
These figures carry extra weight as the last full quarterly dataset before the Renters' Rights Act beds in. Landlords should note that the Act removes fixed-term tenancies and introduces new grounds for possession - changes that affect void risk modelling and how portfolio performance is projected.
HMO landlords will need to consider how rolling tenancies interact with licence conditions and room-by-room letting. Your tenants will benefit from stronger security of tenure, which may actually reduce your void rate if managed well. For a broader view of how to position a portfolio under the new rules, Property Filter's investment strategies guide covers the main approaches across different property types.
Yields have climbed steadily from their post-COVID low of 5.84% in 2021, per Paragon Bank, a gain of more than 1.1 percentage points over five years.
Key Takeaways
UK gross rental yields averaged 7.02% in Q2 2026, up from 6.96% in Q1 (Paragon Bank)
HMO properties led all property types at 8.90%, roughly 2.5 percentage points ahead of terraced housing at 6.31%
Wales delivered the highest regional yield at 8.87%; Greater London recorded the lowest at 5.58%
Scotland and the North East jointly posted 7.97%, with the West Midlands rising to 7.24%
Yields have climbed from 5.84% in 2021, a gain of over 1.1 percentage points across five years (Paragon Bank)
Frequently asked questions
Frequently asked questions
What is the average UK landlord rental yield right now?
Why do HMOs produce higher yields than single-let properties?
Are HMO yields the same across all regions?
