Areas of London: Buy-to-Let Property Investment Hotspots
London, the bustling capital of the United Kingdom, stands as a beacon for property investors worldwide. Its unique blend of history, culture, and economic power makes it a prime destination for international investors from countries like Hong Kong and Singapore as well as local investors and buy-to-let landlords looking to expand their property portfolios.
In the UK property market, London holds a position of singular importance. Its property values often move independently of national trends, driven by its own economic dynamics and international appeal. This guide will explore the intricacies of buy-to-let investment across the UK’s capital, offering insights into its various regions, market trends, rental yields, buyer demand and house price growth (or in some postcodes decline).
Contents
- Best areas in London for property investment - highlights
- Why invest in London?
- Detailed house price data for London buy-to-let
- London rental market analysis (£)
- London rental yields market overview by region
- London HMO market overview by region
- Is rent in London high?
- Are house prices in London high?
- How much deposit is needed for the average property in London?
- Demographics and population trends
- Regeneration and development projects
- Property and landlord licensing
- How to invest in buy-to-let in London
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by Robert Jones, Founder of Property Investments UK
With nearly two decades in UK property, Rob has been investing in buy-to-let since 2005, and uses property data to develop tools for property market analysis.
Best Areas in London for Property Investment - Highlights
London's property market is as diverse as its population, with stark contrasts between different areas. Let's take a closer look at some key metrics across a range of postcode districts
Average house prices £
- High end: In prime central areas like SW7 (Kensington), the average price soars to £2,079,663.
- Mid-range:
- SW11 (Battersea) has an average price of £887,954.
- N1 (Islington) averages at £749,711.
- More affordable: In outer zones like DA9 (Dartford), you can find properties averaging £299,690.
Average house price growth %
- Strong growth: RM4 (Romford) has seen an impressive 37.6% growth in the past year alone after a bounce back from previous years.
- Moderate growth: E17 (Walthamstow) has experienced slow 2.3% growth over the past year but a solid 16.2% over five years.
- Decline: Some areas like SW5 (Earl's Court) have seen a decrease, with -5.1% decline over the past year.
Average cost of rents per week £
- High end: Areas like NW8 (St John's Wood) command average rents of £1,216 per week.
- Mid-range:
- N1 (Islington) averages £667 per week.
- SW18 (Wandsworth) averages £617 per week.
- More affordable: SE25 (South Norwood) averages £373 per week.
Average buy-to-let rental yields %:
- High yield: The highest yields are found in areas like IG11 (Barking), offering an attractive 6.8%.
- Mid-range:
- SE16 (Bermondsey) offers yields of 5.6%.
- SW11 (Battersea) provides yields of 4.8%.
- Lower yield: Prime central areas like SW7 (Kensington) only yield around 3.1% due to their higher house prices.
Property sales and turnover %:
- High activity: SW11 (Battersea) sees about 52 sales per month with a 2% turnover compared to the total amount of available properties for sale.
- Mid-range: N1 (Islington) has around 47 sales per month with a 3% turnover.
- Lower activity: Some prime areas like W1 see about 19 sales per month with only a 1% turnover.
This snapshot reveals the range on offer, for buy-to-let investors focused on the London property market. Offering opportunities for various investment strategies, from high-end, lower-yield properties in central areas to cheaper locations and higher-yield investments in outer London boroughs.
Property Data Sources
Our location guide relies on diverse, authoritative datasets including:
- HM Land Registry UK House Price Index
- Ministry of Housing, Communities and Local Government
- Ordnance Survey Data Hub
- London Rental Map
- Propertydata.co.uk
We update our property data quarterly to ensure accuracy. Last update: September 2024. Next update: December 2024. All data is presented as provided by our sources without adjustments or amendments.
Why Invest in Greater London?
London's appeal as a property investment destination stems from its position as a global financial hub. The city is home to the headquarters of numerous multinational corporations, banks, and financial institutions. This concentration of economic power ensures a constant influx of high-earning professionals seeking quality rental accommodation.
Beyond finance, London's strategic importance extends to government, business, and culture. As the seat of the UK government and a centre for international diplomacy, London attracts a diverse range of residents and visitors. Its world-renowned universities including UCL, Imperial College and LSE draw students from across the globe, while its cultural institutions - from museums to theatres - cement its status as a world city.
This multifaceted appeal translates into a robust and diverse rental market, offering investors a range of opportunities across different property types and locations.
London's vast expanse is typically divided into four main regions, each with its own character and investment potential:
- East London: Known for its rapid regeneration and growing tech scene, areas like Stratford and Canary Wharf offer modern developments and strong rental demand.
- South London: With areas like Clapham and Brixton, South London provides a mix of Victorian housing stock and new builds, popular with young professionals.
- West London: Home to affluent areas like Kensington and Chelsea, West London commands some of the highest property prices but also offers prestigious addresses.
- North London: Areas like Islington and Camden blend trendy urban living with excellent transport links, attracting a mix of students and young families.
Detailed House Price Data for London Buy-to-Let
When was the last house price crash in London?
House price trends vary across these regions, with some areas experiencing faster growth than others. However, the overall trend for London has been upward over the long term.
The last significant property price crash in London occurred during the global financial crisis of 2008-2009. Since then, despite some fluctuations, the market has generally shown resilience and recovery.
Highest average house prices (£) in Greater London
by postcode district (past 12 months)
| Area | House Price |
|---|---|
| W1 (West End/Marylebone/Mayfair) | £2,131,417 |
| SW7 (Kensington) | £2,079,663 |
| SW3 (Chelsea) | £1,948,027 |
| W8 (Kensington) | £1,939,167 |
| SW1 (Belgravia/Pimlico/Westminster) | £1,685,481 |
| WC2 (Covent Garden/Holborn) | £1,482,908 |
| NW8 (St John's Wood) | £1,385,923 |
| SW10 (West Brompton/Chelsea) | £1,272,576 |
| NW3 (Hampstead) | £1,249,217 |
| EC2 (Bishopsgate/Cheapside) | £1,245,750 |
Lowest average house prices (£) in Greater London
by postcode district (past 12 months)
| Area | House Price |
|---|---|
| RM19 (Purfleet) | £233,550 |
| DA9 (Dartford) | £299,690 |
| RM20 (South Ockendon) | £302,742 |
| DA17 (Belvedere) | £320,018 |
| RM18 (Tilbury) | £331,508 |
| DA11 (Gravesend) | £341,507 |
| SE28 (Thamesmead) | £347,149 |
| DA1 (Dartford) | £364,610 |
| RM10 (Dagenham) | £364,244 |
| DA12 (Gravesend) | £369,470 |
Highest house price growth (%) in Greater London
by postcode district (past 12 months)
| Area | House Price |
|---|---|
| RM4 (Romford) | 37.6% growth |
| RM20 (South Ockendon) | 21.1% growth |
| KT18 (Epsom) | 17.1% growth |
| HA1 (Harrow) | 12.3% growth |
| W5 (Ealing) | 12.8% growth |
| IG4 (Redbridge) | 12.7% growth |
| TW5 (Hounslow) | 11.7% growth |
| HA8 (Edgware) | 8.8% growth |
| IG9 (Buckhurst Hill) | 8.4% growth |
| N11 (New Southgate) | 7.8% growth |
Lowest house price growth (%) in Greater London
by postcode district (past 12 months)
| Area | House Price |
|---|---|
| SW8 (South Lambeth) | -35.0% decline |
| KT24 (East Horsley) | -24.2% decline |
| SW10 (West Brompton/Chelsea) | -23.5% decline |
| WC1 (Bloomsbury/Gray's Inn) | -23.5% decline |
| WC2 (Covent Garden/Holborn) | -22.9% decline |
| DA10 (Dartford) | -22.0% decline |
| NW8 (St John's Wood) | -19.0% decline |
| TW10 (Richmond) | -19.1% decline |
| W12 (Shepherd's Bush) | -18.6% decline |
| W11 (Notting Hill) | -16.8% decline |
Property Data Sources
Our location guide relies on diverse, authoritative datasets including:
- HM Land Registry UK House Price Index
- Ministry of Housing, Communities and Local Government
- Ordnance Survey Data Hub
- London Rental Map
- PropertyData.co.uk
We update our property data quarterly to ensure accuracy. Last update: September 2024. Next update: December 2024. All data is presented as provided by our sources without adjustments or amendments.
London Rental Market Analysis
The rental market in London is diverse and dynamic. Average rental prices vary widely depending on the location and property type, but as a general guide:
Highest average rental per week (£) in Greater London
by postcode district
| Area | House Price |
|---|---|
| SW7 (Kensington) | £1,237.7 per week |
| NW8 (St John's Wood) | £1,216.8 per week |
| W1 (West End/Marylebone/Mayfair) | £1,038.1 per week |
| W8 (Kensington) | £1,036.4 per week |
| SW1 (Belgravia/Pimlico/Westminster) | £1,032.3 per week |
| SW3 (Chelsea) | £987.0 per week |
| W2 (Bayswater/Paddington) | £981.1 per week |
| KT11 (Cobham) | £976.5 per week |
| NW3 (Hampstead) | £955.3 per week |
| WC2 (Covent Garden/Holborn) | £911.3 per week |
Lowest average rental per week (£) in Greater London
by postcode district
| Area | House Price |
|---|---|
| RM18 (Tilbury) | £309.7 per week |
| DA11 (Gravesend) | £313.1 per week |
| EN11 (Hoddesdon) | £318.3 per week |
| RM19 (Purfleet) | £328.5 per week |
| DA12 (Gravesend) | £329.2 per week |
| WD17 (Watford) | £353.1 per week |
| RM20 (South Ockendon) | £354.5 per week |
| DA3 (Longfield) | £360.9 per week |
| RM15 (South Ockendon) | £362.6 per week |
| DA9 (Dartford) | £363.9 per week |
London Rental Yields Market Overview by Region
North London
- N1 (Islington): In the heart of trendy Islington, investors are seeing average yields of 4.6%, a respectable return for such a central location, with properties averaging £749,711 and weekly rents around £667, attracting young professionals and creatives alike.
- N17 (Tottenham): Further north, Tottenham offers more attractive yields at 5.6%, thanks to lower average property prices of £461,603 and weekly rents of £495, making it a potential hotspot for investors looking for better returns in an up-and-coming area.
East London
- E14 (Canary Wharf): The financial district of Canary Wharf presents a solid investment opportunity with average yields of 5.1%, balancing high average property prices of £569,991 with strong weekly rents of £554, catering to the area's high-earning professionals.
- E7 (Forest Gate): In contrast, Forest Gate offers even more appealing yields at 5.1%, but with much lower entry costs - average property prices here are £475,533 with weekly rents of £463, potentially offering better value for investors on a budget.
South London
- SE25 (South Norwood): South Norwood emerges as a yield hotspot, offering an impressive 5.1% average yield, with affordable average property prices of £379,298 and weekly rents of £373, presenting an attractive opportunity for investors seeking strong returns.
- SE10 (Greenwich): The historic area of Greenwich provides a balanced investment profile with 4.9% average yields, where average property prices of £538,293 are offset by healthy weekly rents of £510, appealing to investors looking for a blend of yield and potential capital appreciation.
West London
- W3 (Acton): Acton offers investors a respectable 4.6% average yield, with property prices averaging £587,439 and weekly rents of £524, benefiting from ongoing regeneration and improved transport links that could drive future growth.
- W12 (Shepherd's Bush): Nearby Shepherd's Bush presents a slightly lower but still attractive 4.4% average yield, with higher average property prices of £727,002 balanced by strong weekly rents of £608, capitalising on its excellent location and amenities.
London HMO (houses of multiple occupation) Market Overview by Region
North London
- N1 (Islington): In this bustling area, HMO tenants can expect to pay an average of £209 per week for a double room with shared bathroom, with 98% of properties coming furnished and nearly half including bills, making it an attractive option for young professionals.
- N4 (Finsbury park): HMO living in N4 offers a similar average rent of £210 per week for a double room, but with more outdoor space (58% of properties) and a higher likelihood of finding pet-friendly accommodation (12% accept pets), appealing to nature lovers and pet owners.
East London
- E1 (Whitechapel): This diverse neighborhood offers more affordable HMO options at an average of £184 per week for a double room, with a high proportion (68%) including bills and excellent internet connectivity (89% of properties), ideal for students and remote workers.
- E7 (Forest Gate): E7 provides even more budget-friendly options at £183 per week on average, with a remarkable 75% of properties offering outside space and 75% featuring a living room, making it a great choice for those seeking a more homely HMO experience.
South London
- SE15 (Peckham): Peckham's HMO market shows a higher average rent of £209 per week for a double room, but offers excellent value with 80% of properties featuring outside space and 72% including a living room, perfect for socializing and outdoor enthusiasts.
- SE1 (Southwark): As expected for its central location, SE1 commands higher rents at £234 per week on average, but compensates with excellent amenities - 89% offer internet, 77% have living rooms, and it boasts good disabled access (7% of properties), catering to a diverse range of tenants.
West London
- W3 (Acton): Acton offers competitive HMO rents at £189 per week on average for a double room, with an impressive 100% of properties coming furnished and 90% providing internet, making it an excellent choice for those new to London or starting their careers.
- W5 (Ealing): Slightly pricier at £200 per week on average, Ealing HMOs stand out with 78% including bills, 78% offering outside space, and 72% featuring living rooms, providing a well-rounded living experience for tenants willing to pay a bit more for comfort and convenience.
Property Data Sources
Our location guide relies on diverse, authoritative datasets including:
- HM Land Registry UK House Price Index
- Ministry of Housing, Communities and Local Government
- Ordnance Survey Data Hub
- London Rental Map
- PropertyData.co.uk
We update our property data quarterly to ensure accuracy. Last update: September 2024. Next update: December 2024. All data is presented as provided by our sources without adjustments or amendments.
Is London Rent High?
Compared to other major UK cities, rent in London is significantly higher. This is evident across various property types and locations within the capital. In prime central areas like Kensington (SW7), average weekly rents can reach £1,237.7, while even more affordable outer London areas such as South Norwood (SE25) still command £373.3 per week. These figures are substantially higher than average rents in other UK cities, with a one-bedroom flat in central London often costing twice as much as a similar property in Manchester or Birmingham.
While the high rents in London are offset to some extent by higher average salaries in the capital, the proportion of income spent on rent is often higher than in other UK cities. This high cost of renting is reflected across different segments of the market, from entire properties to rooms in Houses of Multiple Occupancy (HMOs), where weekly rents for double rooms with shared bathrooms can range from £183 in Forest Gate (E7) to £234 in Southwark (SE1). Despite these high rents, London often offers lower rental yields compared to other UK cities due to its elevated property prices, presenting a unique challenge for both residents and property investors.
Are House Prices in London High?
House prices in London are indeed high for property investors compared to other UK cities. The average property price in London is often double or triple that of major cities like Birmingham, Manchester, or Leeds. This is evident from our data, which shows extreme variations even within London itself. For instance, in prime central areas like SW7 (Kensington), the average house price soars to £2,079,663, while in more affordable outer areas like DA9 (Dartford), the average is still a substantial £299,690. These figures dwarf the national average house price and reflect London's status as a global city with a robust economy and high demand for housing.
The high prices are not limited to central London. Even in areas considered more affordable by London standards, such as E17 (Walthamstow) with an average price of £545,431, the costs are significantly higher than in most other UK cities. Consequently, while London offers potential for capital appreciation, it also presents significant barriers to entry for many homebuyers and buy-to-let investors.
How Much Deposit Do You Need for the Average Property in London?
Assuming a 30% deposit for the average buy-to-let London investor, here's an overview of deposit requirements across different London regions:
North London
- N16 (Stoke Newington): A buy-to-let investor looking at an average property in Stoke Newington (£639,310) would need to put down a 30% deposit of £191,793, with the potential to achieve a rental yield of 4.1%.
- N7 (Holloway): In Holloway, an investor would need a 30% deposit of £173,825 for an average property (£579,418), potentially benefiting from a higher rental yield of 5.2%.
East London
- E14 (Canary Wharf): An investor in Canary Wharf's bustling market would require a 30% deposit of £170,997 for an average property (£569,991), with the opportunity to earn a rental yield of 5.1%.
- E4 (Chingford): For a buy-to-let purchase in Chingford, an investor would need to have a 30% deposit of £169,160 saved for an average property (£563,867), potentially achieving a rental yield of 4.1%.
South London
- SE22 (East Dulwich): In popular East Dulwich, a buy-to-let investor would need a significant 30% deposit of £189,719 for an average property (£632,399), with the potential to earn a rental yield of 4.3%.
- SE8 (Deptford): An investor considering Deptford would need to save a 30% deposit of £133,966 for an average property (£446,555), potentially benefiting from a higher rental yield of 5.5%.
West London
- W4 (Chiswick): In affluent Chiswick, a buy-to-let investor would need a substantial 30% deposit of £236,095 for an average property (£786,984), with the potential to achieve a rental yield of 3.8%.
- W13 (West Ealing): For an average property in West Ealing, an investor would need to have a 30% deposit of £189,289 saved (£630,966), potentially earning a rental yield of 3.9%.
Demographics and Population Trends
London's population is young, diverse, and growing. Key demographic trends from the 2021 Government Census include:
- A median age of around 35, lower than the UK average
- High levels of international migration, contributing to population growth
- A highly educated workforce, with over 50% of working-age residents holding a degree
Population growth projections suggest London will reach 10 million residents by 2030, driven by both natural increase and continued migration.
Regeneration and Development Projects
London is continually evolving, with numerous regeneration projects underway. Major developments include:
- The ongoing Crossrail project, set to improve east-west connectivity
- Regeneration of areas like Battersea and Nine Elms
- Continued development in East London, building on the legacy of the 2012 Olympics
London faces an ongoing housing shortage, with new Labour targets to build around 80,000 new homes across the city annually to meet demand.
Property and Landlord Licensing Across the Boroughs
Landlords in London must navigate various regulations:
- Most London boroughs require landlords to obtain a licence, particularly for HMOs.
- Article 4 directions in many areas restrict the conversion of family homes to HMOs. You can see where each borough across Greater London has article 4 in place here.
- Greater London has a wide range of planning requirements which are changing all the time. You can see an interactive Greater London planning map from the London.gov.uk here.
Investors should always check the specific requirements in their chosen borough before purchasing a property. This should include your specific strategy, as each borough will have a different approach for long let buy-to-lets, holiday lets and houses of multiple occupation with selective, mandatory or additional licensing.
How to Invest in Buy-to-Let in Greater London
For properties to buy in London, including off-market properties and high yielding opportunities, we have partnered with the best property investments agents we can find for 8+ years. You can get access to the latest property opportunities from our network here.