East London offers the best rental yields in the capital, according to the latest data-analysis by estate agent Portico.
Its interactive rental yield map shows within east London, Barking has one of the lowest median house prices across Greater London at just over £300,000 and the best current rental yield at 5.9%.
The area has enjoyed significant redevelopment in recent times, which is being reflected in demand from tenants. Regeneration of the town centre has brought new retail and business spaces, along with more new homes.
Not too far away, Upney is to the east of the same borough and appears second in the table at 5.8%. While property prices are slightly higher than in other parts of the district, landlords can still find investment bargains, the firm says.
Third on the east London table comes Wall End, also boasting a 5.8% yield. The neighbourhood sits within multicultural East Ham, near the River Roding, possessing good transport links and benefitting from older, lower-priced properties.
Across the rest of the capital, north London’s Brimsdown offers a healthy yield of 5.6%. The best yield in the west is 5.1% in Hayes and Harlington, and in the south, Mitcham offers 4.9%. The top performers in the north and west of the capital share an ongoing transformation from their more commercial or industrial pasts and the future arrival of Crossrail trains. Mitcham, in the south, has long been popular with retirees.
As a comparison, according to Zoopla, London’s average gross rental yield was 3.8% in December 2020, down from 4.2% in February and 5.9% at its September 2012 peak. At the end of last year, the UK average was 5.3%.
Robert Nicols, chief executive officer at Portico, says: “Landlords and tenants have both changed their thinking in recent years due to a combination of factors. While property prices rose overall during the first half of the last decade and climbed 74% between 2010-2020, rents largely followed modest wage rises, and rental yields suffered somewhat as a result – especially in areas around central and West London.”
He says heading into the new decade, Brexit and the coronavirus pandemic added further uncertainty on ‘an already subdued property market’, which has carried into the current year.
“Despite this, our research shows that there are still healthy rental yields to be found in London – if you know where to look,” he adds. “Outer London areas are actually seeing rent increases between 1-3% as tenants – now spending a lot more time at home – migrate from more central areas to the suburbs looking for more space.”
“East London is still a buy-to-let hotspot – and we expect demand from tenants to increase as lockdown restrictions ease.”
This post has originally been featured in Property Investor Today.