The Areas of London With the Best Rental Yields: A Guide for Investors
by Property Investments UKThe Property Investments UK editorial team have been researching and writing about the UK's property market for more than a decade.
Rents in London are the highest in the UK, but so are property prices. That means it can be tough to find the highest rental yields here. However, London can offer good letting yields if you know where to look. Here’s our guide to finding the best-letting yields in London.
- What is the Average Yield in London?
- What is a Good Yield in London?
- How to Achieve a High Rental Yield in London
- How to Calculate Yields
- Where in London Has the Highest Rental Yields?
- Manor Park
- Victoria Docks and North Woolwich
- Southall and Norwood Green
- Abbey Wood
- Dartford, Crayford and Barnes Cray
What is the Average Yield in London?
The average gross yield for a long let can vary considerably depending on the area of London. Some areas of London offer a gross yield of only around 2% while other areas of London offer a gross yield of well over 5%.
According to figures from property.xyz the average property asking price in London is currently £489,463 and the average weekly rent is £395. This means that based on these figures the average long let gross yield across London is 4.19%. (It is important to bear in mind that these are average figures. Prices and rents in some parts of London are much higher and in other areas they are lower.)
Local estate and letting agents for the relevant part of London can advise on local pricing and likely local achievable rents and hence yields.
Access our selection of exclusive, high-yielding, off-market property deals and a personal consultant to guide you through your options.
What is a Good Yield in London?
Based on figures from property.xyz a yield over 5% could be considered a good yield for London buy-to-lets.
How to Achieve a High Rental Yield in London
Average yield figures are normally based on the yields obtainable from a long let of a property let to a single person or family. However, there are several possible ways of getting higher yields in London.
In most cases, higher yields in London can be obtained by letting a property as a house share (also known as an HMO), to student tenants or as a short-term or holiday let.
How to Calculate Yields
Gross average yields in London are calculated in exactly the same way as anywhere else.
To find a London gross yield divide the annual likely rental income from a property by its likely purchase price and then multiply it by 100 to find the average percentage gross yield.
For example, a London property with a purchase price of £750,000 and a monthly rental value of £2,800 would offer a letting yield of:
£2,800 x 12 = £33,600 annual rental income
£33,600 divided by £750,000 x 100
= 4.48% annual yield.
I you don't fancy doing the maths, you can use our rental yield calculator.
Where in London Has the Highest Rental Yields?
In this report, we’ve analysed property price and rental data from right across London to find the top 15 areas of London with the highest rental yields.
1. Manor Park
The London E12 postcode area currently offers the highest letting yields in London according to our data. Manor Park is in northeast London between Stratford and Ilford and in the borough of Newham. The area also includes Little Ilford and part of Aldersbrook. Manor Park is a mainly residential area and has good tube and train links into the City of London and the West End.
The current average property price in Manor Park E12 is £436,333 and the current average weekly rent is £480. This means the average yield for a long-term let in Manor Park is currently 5.72%.
Thamesmead SE28 is in southeast London between the boroughs of Greenwich and Bexley. Thamesmead is a purpose-designed community originally created in the 1960s with large areas of social housing. Thamesmead’s transport links into London have improved greatly since the new Elizabeth Line opened.
Thamesmead currently has some of the highest rental yields in London, only slightly behind Manor Park. The current average yield for a long-term let in Thamesmead is a strong 5.7%.
The E15 postcode area is in east London. The largest suburb in E15 is Stratford and other places in the district include Maryland plus parts of Bow, Hackney Wick, Leyton, Leytonstone, Temple Mills and West Ham. Stratford is now a major regional centre known for the Queen Elizabeth Olympic Park, London Stadium and Westfield Stratford City shopping mall. It has excellent transport links from Stratford International Station.
Stratford has some of the highest long-term letting yields in London. The current average yield is 5.65% based on our data.
Paddington is within the W2 postcode area. Other districts in the area include Bayswater, Hyde Park and Westbourne Green plus parts of Little Venice and Notting Hill.
Paddington is generally a high property price area with many upmarket houses and flats. It has an average property price of £961,565 and rents here are also well above average at £1,039 per week according to our figures. This means landlords in Paddington can earn a long-term yield of 5.61% on average.
5. Victoria Docks and North Woolwich
Victoria Docks and North Woolwich form the E16 postcode alongside Beckton, Canning Town, Custom House, Royal Docks and Silvertown. They are close to London City Airport in east London and part of Newham borough. The former docklands here have undergone much regeneration in recent decades and more development is underway and planned.
The average long-term letting yield in E16 is the fifth highest in London at 5.54%.
6. Southall and Norwood Green
The southern part of Southall and Norwood Green make up the UB2 postcode district. They are in west London, and part of the borough of Ealing. The arrival of the Elizabeth Line to Southall train station recently has made the area much more accessible to commuters.
The average long-term letting yield in South Southall and Norwood Green is 5.52% based on our figures.
7. Abbey Wood
Abbey Wood is in south-east London. The new Elizabeth Line station at Abbey Wood has made the area much more accessible for commuters. As well as Abbey Wood the SE2 postcode area includes Crossness, West Heath and part of Plumstead.
Landlords in Abbey Wood could expect an average long-term letting yield of 5.4% based on our data.
Bow is in east London and part of what is known as the East End. Bow is in Tower Hamlets borough. Other suburbs in the E3 district include Bromley by Bow, Bow Common, Old Ford and part of Mile End. Bow is only around 3-4 miles from central London and has good access to it by rail and road.
Landlords in Bow, E3, could expect an average letting yield well above the London average at 5.36%.
Woolwich is in southeast London and part of the borough of Greenwich. SE18 covers not only Woolwich but Plumstead, Royal Arsenal and Shooter’s Hill.
The new Elizabeth Line station at Woolwich means the City of London can be reached in only around 15 minutes. This has made the area more attractive to commuters. The area around Royal Arsenal is undergoing extensive regeneration. In total over 5,000 new homes plus new employment space and new public amenities are being built here.
Long-term lets in Woolwich SE18 are likely to be around 5.31%.
Belvedere is within the top ten areas of London with the highest letting yields. Belvedere is part of the London borough of Bexley. Belvedere includes areas such as Upper Belvedere and Lower Belvedere while the DA17 postcode also includes Lessness Heath and parts of Abbey Wood.
Long-term lets in Belvedere are likely to be around 5.26%.
Deptford is in south London. It is on the south bank of the River Thames and just to the west of Greenwich. Other suburbs in the area include Deal’s Gateway, St. Johns and part of Rotherhithe.
The average long-term letting yield in Deptford (based on the SE8 district) is currently 5.24% according to our figures.
Plaistow is in east London and is part of the borough of Newham. The E13 area also includes part of Upton Park and West Ham. Plaistow is just a few miles east of the City and West End and has good road and rail connections making it popular with those who work in central London.
The average long-term letting yield in Plaistow (based on the E13 district) is currently 5.21%, according to our figures.
13. Dartford, Crayford and Barnes Cray
Dartford, Crayford and Barnes Cray are to the south-east of London and make up the Dartford DA1 postcode area. These areas are on the edge of Greater London and while some parts of the area are in the London borough of Bexley others are in Dartford borough which is part of Kent. The area has good access to the A2, A282, M25 and the Dartford Crossing making it attractive to those who travel around the southeast by road.
The average long-term letting yield in DA1 is currently 5.14% according to our figures.
Dagenham is in east London. Dagenham is part of the London borough of Barking and Dagenham. Areas of Dagenham include Beam Park, Becontree, Chadwell Heath, Collier Row, Dagenham Dock and Rush Heath. Dagenham was historically an industrial area but is undergoing lots of regeneration and new development. Dagenham is well located for access into London as well as out of London and to the M25 motorway.
Letting yields vary slightly across Dagenham. In the RM9 area where rents are slightly higher average long-term letting yields are 5.13%. In the RM8 area yields are still just over 5% (5.02%).
Erith is to the south-east of London and is part of the borough of Bexley. The DA8 postcode area also includes Northumberland Heath and Slade Green.
The average long-term letting yield in DA8 just tops 5% at 5.07% currently.
Highest Rental Yields by Postcode
Although there are some exceptions, it is mainly some of the eastern and southeastern areas of London that offer the highest rental yields. According to our latest research, the highest letting yields in London can be found in the following postcode areas:
DA1, DA8 DA17, E3, E12, E13, E15, E16, RM8, RM9, SE2, SE8, SE18, SE28, UB2 and W2.