Its data found that two in five (41%) landlords saw tenant demand increase in the quarter.
Demand was in the East of England (52%) followed by London (48%), the East Midlands (47%) and the South East excluding London (47%).
John Heron, director of mortgages at Paragon, said: “This research shows that yields, and tenant demand have remained strong throughout Q3, in common with 2015 overall.
“The figures reflect a steadily improving economic outlook for the UK as a whole and show that, more and more people are actively choosing the flexibility of making a home in the private rented sector.
Average yields in Q3 were highest in Yorkshire and the Humber (6.1%) followed by the North West (5.9%) and the East Midlands (5.8%).
Heron added: “Yields too have remained stable throughout 2015. Q3’s data shows London (5.2%) and the South East (5.4%) slowing down somewhat, while yields in the regions are growing.
“This represents a welcome rebalancing of the national economy, with some of the heat from London’s economy escaping the M25 and being distributed around the country.”
