Ahead of its introduction, the impact of the Renters' Rights Act on landlords is already being felt in rental yields. According to Paragon Bank's latest data, UK average gross rental yields climbed to 7.02% in Q2 2026, up from 6.96% in the previous quarter.
Houses in Multiple Occupation (HMOs) continued to drive these increases, with average yields reaching a staggering 8.90%. This is an increase of 0.14 percentage points on the last quarter and marks HMOs as the top-performing property type for another quarter.
The consistent growth in yields since Q2 2021 highlights the resilience of the rental market. Even as other sectors face uncertainty, landlords are seeing strong returns – with multi-unit blocks achieving an average yield of 7.18% and flats and terraced housing recording 6.45% and 6.31% respectively.
Regional variations were also notable, with Wales maintaining its position at the top of the table for highest average yield (8.87%). Scotland and the North East came second, both with yields of 7.97%. Meanwhile, Scotland saw a significant quarterly growth in yields, increasing by 0.53 percentage points.
However, some regions are already experiencing the impact of the impending Renters' Rights Act. Greater London, for instance, saw its yield fall to 5.58% – the lowest in the UK – down from 5.74% in Q1 2026. The South East also followed suit with a lower yield of 6.48%, down from 6.64% in the previous quarter.
According to Louisa Sedgwick, Managing Director of Mortgages at Paragon Bank, 'The second quarter's data shows that landlords continue to see strong income returns through HMOs and other specialist accommodation.' She added that this trend is set to continue despite regulatory changes, as long as there is clear local demand for such properties.