Landlords in the East Midlands are getting the highest average yield across the UK, according to Paragon Mortgages’ research.

The lender found that East Midlands landlords are beating their neighbours in the West Midlands, who dropped to eighth place – to the top spot.

The research revealed that rental property in the East Midlands generated an average yield of 6.4% during quarter four.

The South East (excluding London) came in second place with a yield of 6.1%, which was followed by the South West which generated a yield of 6.0%. The high yields generated in the South reflect the strong level of demand in these areas for rental property.

Paragon Mortgages worked with independent researchers BDRC Continental in conjunction with the NLA, to survey more than 500 landlords – a percentage of which are Paragon Mortgages and Mortgage Trust customers – during the last quarter of 2011.

Paragon customers who took part in the survey reported an average yield of 6.9% for Q4 – higher than the market average of 5.9%.

The survey also revealed that the highest yielding property type is a detached house, generating an average yield of 6.6%. This was followed by terraced houses and HMOs (House in Multiple Occupation) which generated yields of 6.1% and 6.0% respectively.

John Heron , managing director of Paragon Mortgages, said: “The yield a landlord’s rental property generates is a key indicator of how well the property is performing and is an essential part of the landlord’s overall business plan.