Landlords in the West Midlands enjoy the highest rental yields in the UK, according to research published by the Paragon Group.

The buy-to-let lender said that rental property in the West Midlands generated an average yield of 7.35%. The West Midlands region, which encompasses Birmingham, Wolverhampton, Coventry, Stoke and Worcester, is undergoing a renaissance, with the redevelopment of Birmingham city centre and a host of businesses creating jobs in the region, including Jaguar Land Rover and John Lewis. The region has a strong manufacturing base, as well as a growing professional services sector and a number of renowned universities, Paragon noted.

Outer London followed with an average yield of 7.32%, the South West had a yield of 7.07% and the North West generated a yield of 6.97%.

Research firm BDRC Continental was commissioned to survey nearly 600 landlords across the UK during September.

The research also revealed that students remained the highest yielding tenant type with an average yield of 7.62%. Students provide attractive yields as the property is typically let on a per room basis and benefit from parental guarantees. At the other end of the scale, families with children and migrant workers generated yields, of 6.57% and 6.53% respectively.

Meanwhile, the research showed that Houses in Multiple Occupation (HMO) were the highest yielding property type for landlords with a yield of 7.56%. An HMO is a property shared by three or more tenants who are not members of the same family and who share amenities, such as a hallway, kitchen or bathroom.

HMOs were followed by bungalows, providing an average yield of 6.99%, and flats where the landlord owned the entire block were third in line with a yield of 6.95%.

Nigel Terrington , Paragon’s chief executive, said: “The yield a rental property generates is a hugely important part of a landlord’s business plan