High yields and rising rents are driving remortgages and new investor enquiries, even as regulation clouds the outlook
Wales has emerged as the most profitable region in the United Kingdom for landlords, with average gross rental yields climbing to 8.84 per cent, according to Paragon Bank’s latest Buy-to-Let Yield Report (Q3 2025).
The figure, up from 8.59 per cent in the previous quarter, puts Wales ahead of every other UK region on gross returns. The data highlights how investors are increasingly gravitating towards affordable, higher-yield markets as activity in southern England cools.
Brokers say the Welsh market’s defining features are value, resilience and a steady flow of new investor activity, particularly in South Wales and the Valleys.
Broker insight: landlords stay active as rents rise
“Demand for rental properties in Wales is still high,” said Joanna O’Shea of The Mortgage Mum. “Existing landlords remortgaging have increased their rent since they last reviewed their mortgage, and enquiries from first time landlords, entering the market and buying in South Wales and the Valleys where rental yields are high, have increased.”
Her experience aligns with the data-driven picture: comparatively low purchase prices and sustained tenant demand are underpinning yields. For intermediaries, that mix is supporting both remortgage and purchase pipelines, even as borrowing costs remain elevated.
“Many of our clients have been able to offset higher interest rates through rising rents,” O’Shea said. “That has encouraged more landlords to stay in the market rather than sell, which keeps broker business steady.”
Complex cases and looming regulation test resilience
Alongside remortgaging, advisers report that diversification is shaping the Welsh buy-to-let landscape as investors seek to maintain income and manage risk.
“The BTL market remains a strong market compared to other areas we have found,” said Mike Powell of Mike Powell Mortgages. “We are seeing a lot of HMO and MUFB being purchased as landlords look to diversify. Some are moving into semi-commercial as well.”
That shift points to growing demand for specialist finance and more complex case structuring, areas where broker expertise is central. But while the financial case for Welsh buy-to-let remains strong, regulation and supply constraints could limit growth.
Powell warned that policy uncertainty may put pressure on parts of the market. “My concern is the stock and the EPC law changes that are potentially coming,” he said. “I feel these need to be re-evaluated for the older Victorian stock for example.”
His comments reflect broader industry unease about energy efficiency rules. Many of Wales’s most in-demand rental properties are in older housing stock, often built well before modern standards. While ministers have yet to confirm a timetable for tougher EPC requirements, clarity on standards and timescales will be important for investors planning upgrades and for brokers arranging suitable finance.
Despite regulatory uncertainty, confidence in rental demand has held up in key Welsh locations, from Cardiff and Swansea to university towns and commuter corridors. Lower average purchase prices continue to attract interest from investors based both within Wales and elsewhere in the UK, supporting activity across mainstream and specialist buy-to-let products.
Paragon’s report indicates that Wales has led the UK on yields throughout 2025, reflecting a combination of tenant demand and modest property values. For brokers, the practical implications are clear: healthy remortgage flows, rising enquiries from first-time landlords, and increasing use of HMOs, MUFBs and semi-commercial assets where appropriate.
The outlook will hinge on policy clarity and the availability of good-quality stock. For now, however, the yield premium keeps Wales firmly on investors’ radar - and ensures brokers remain at the centre of one of the UK’s most resilient regional markets.
