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What is a good rental yield in London? An ultimate guide for landlords

27/07/2022
Landlord

A good rental yield in London, where property prices are higher than anywhere else in the UK, might be anything over 5%.

In this guide, we explain what rental yield is and how to calculate it, as well as looking at which areas of London have the best yields for landlords.

What is rental yield?

Rental yield tells you what percentage of your property’s value you’re earning in rental income each year.

Essentially, rental yield tells you how profitable your property is against your original investment, so it’s hugely important both when looking at properties to invest in and calculating the ongoing profitability of your existing buy-to-lets.

How to work out rental yield

Working out a property’s gross rental yield couldn’t be simpler.

Take the property’s monthly or projected rental income and multiply by 12 to get your annual rental income.

Then divide that figure by your property’s value or purchase price and multiply by 100 to get your rental yield.

For example:

• Monthly rent of £800 multiplied by 12 = £9,600

• £9,600 divided by a property value of £260,000 = 0.0369

• 0.0369 multiplied by 100 = rental yield of 3.69%

What is a good rental yield in the UK?

Rental yields across the UK fluctuate hugely depending on the area.

In England, the average rental property yield at the end of Q1 of 2021 was 3.2%:

• England average property price (March 2021): £273,486

• England average monthly rent (March 2021): £730

• Average yield: 3.2%

Data from Office for National Statistics (ONS)

Generally, rental yields are higher in places like Manchester and Liverpool, where rental prices are strong, but property prices are below the national average.

In Manchester, for example, the average price of a property inside the M60 motorway was £198,240 in May 2021 and the city’s average monthly rent was £833.

That means an average yield of 5%, although yields upwards of 8% are not uncommon.

In London, where rental prices can be high, but property prices are the highest in the entire country, yields are generally lower than those North West hotspots.

However, it is possible to find yields of above 5% in certain areas of the capital.

The best rental yields in London

London’s average rental yield at the end of Q1 2021 was 3.6% – above the England-wide average:

• Average London property price (end of Q1 2021): £635,306

• Average monthly rent in London (end of Q1 2021): £1,919

• Average yield: 3.6%

Data from Rightmove’s May House Price Index and Q1 Rental Price Tracker

However, as with the rest of England, yields across the capital can fluctuate hugely.

Here are all of London’s rental yields calculated by postcode, using property price and rental price data from Dataloft Inform in June 2021:

Central London rental yields

Postcode	Areas covered	Average property price	Avg monthly rent	Avg yield
EC1	Barbican, Clerkenwell, Finsbury	£744,620	£1,873	3.02%
EC2	Moorgate, Liverpool Street	£865,196	£2,014	2.79%
EC3	Aldgate, Monument, Tower Hill	£653,551	£1,908	3.50%
EC4	Fleet Street, St Paul’s	£644,183	£1,631	3.04%
WC1	Bloomsbury, Gray’s Inn	£910,012	£1,845	2.43%
WC2	Covent Garden, Holborn, Strand	£1,792,859	£2,363	1.58%

East London rental yields

Postcode	Areas covered	Average property price	Avg monthly rent	Avg yield
E1	Mile End, Stepney, Whitechapel	£534,153	£1,651	3.71%
E2	Bethnal Green, Shoreditch	£531,393	£1,586	3.58%
E3	Bow, Bromley-by-Bow	£469,153	£1,457	3.73%
E4	Chingford, Highams Park	£454,893	£1,278	3.37%
E5	Clapton	£598,723	£1,543	3.09%
E6	East Ham, Beckton	£354,995	£1,304	4.41%
E7	Forest Gate, Upton Park	£443,538	£1,315	3.56%
E8	Hackney, Dalston	£597,878	£1,794	3.60%
E9	Hackney, Homerton	£554,907	£1,457	3.15%
E10	Leyton	£447,492	£1,306	3.50%
E11	Leytonstone	£510,953	£1,336	3.14%
E12	Manor Park	£428,836	£1,353	3.79%
E13	Plaistow	£391,259	£1,213	3.72%
E14	Isle of Dogs, Millwall, Poplar	£550,129	£1,533	3.34%
E15	Stratford, West Ham	£411,433	£1,444	4.21%
E16	Canning Town, North Woolwich	£456,226	£1,376	3.62%
E17	Walthamstow	£495,730	£1,339	3.24%
E18	South Woodford	£514,230	£1,346	3.14%

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North London rental yields

Postcode	Areas covered	Average property price	Avg annual rent	Avg yield
N1	Barnsbury, Canonbury, Islington	£762,070	£1,824	2.87%
N2	East Finchley	£990,736	£1,993	2.41%
N3	Finchley Central	£629,246	£1,413	2.69%
N4	Finsbury Park, Manor House	£577,703	£1,515	3.15%
N5	Highbury	£782,447	£1,756	2.69%
N6	Highgate	£1,003,340	£1,598	1.91%
N7	Holloway	£558,341	£1,548	3.33%
N8	Crouch End, Hornsey	£657,888	£1,442	2.63%
N9	Lower Edmonton	£332,063	£1,228	4.44%
N10	Muswell Hill	£748,319	£1,514	2.43%
N11	Friern Barnet, New Southgate	£501,558	£1,303	3.12%
N12	North Finchley, Woodside Park	£550,100	£1,433	3.13%
N13	Palmers Green	£502,878	£1,329	3.17%
N14	Southgate	£606,490	£1,446	2.86%
N15	Seven Sisters	£525,153	£1,312	3.00%
N16	Stamford Hill, Stoke Newington	£629,364	£1,561	2.98%
N17	Tottenham	£404,272	£1,313	3.90%
N18	Upper Edmonton	£327,161	£1,305	4.79%
N19	Archway, Tufnell Park	£645,528	£1,497	2.78%
N20	Totteridge, Whetstone	£726,228	£1,429	2.36%
N21	Winchmore Hill	£600,788	£1,432	2.86%
N22	Alexandra Palace, Wood Green	£536,580	£1,315	2.94%

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North West London rental yields

Postcode	Areas covered	Average property price	Avg monthly rent	Avg yield
NW1	Camden Town, Regent’s Park	£758,531	£1,804	2.85%
NW2	Cricklewood, Neasden	£569,872	£1,439	3.03%
NW3	Hampstead, Swiss Cottage	£1,131,425	£2,105	2.23%
NW4	Brent Cross, Hendon	£527,848	£1,396	3.17%
NW5	Kentish Town	£707,148	£1,721	2.92%
NW6	Kilburn, Queens Park, West Hampstead	£741,062	£1,554	2.52%
NW7	Mill Hill	£638,429	£1,519	2.86%
NW8	St John’s Wood	£1,089,665	£1,897	2.09%
NW9	Colindale, Kingsbury	£416,285	£1,353	3.90%
NW10	Harlesden, Kensal Green, Willesden	£613,326	£1,475	2.89%
NW11	Golders Green, Hampstead Garden Suburb	£828,438	£1,676	2.43%

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South East London rental yields

Postcode	Areas covered	Average property price	Avg monthly rent	Avg yield
SE1	Bermondsey, Borough, Southwark, Waterloo	£736,619	£1,819	2.96%
SE2	Abbey Wood	£332,957	£1,265	4.56%
SE3	Blackheath, Westcombe Park	£568,599	£1,507	3.18%
SE4	Brockley, Crofton Park, Honor Oak Park	£566,997	£1,388	2.94%
SE5	Camberwell	£516,456	£1,544	3.59%
SE6	Bellingham, Catford, Hither Green	£431,586	£1,205	3.35%
SE7	Charlton	£467,045	£1,236	3.18%
SE8	Deptford	£434,058	£1,402	3.88%
SE9	Eltham, Mottingham	£420,028	£1,290	3.69%
SE10	Greenwich	£538,467	£1,504	3.35%
SE11	Lambeth	£528,360	£1,664	3.78%
SE12	Grove Park	£434,499	£1,320	3.65%
SE13	Hither Green, Lewisham	£458,516	£1,288	3.37%
SE14	New Cross, New Cross Gate	£481,947	£1,386	3.45%
SE15	Nunhead, Peckham	£549,619	£1,496	3.27%
SE16	Rotherhithe, South Bermondsey, Surrey Docks	£475,590	£1,516	3.83%
SE17	Elephant & Castle, Walworth	£522,599	£1,703	3.91%
SE18	Plumstead, Woolwich	£350,393	£1,249	4.28%
SE19	Crystal Palace, Upper Norwood	£455,225	£1,311	3.46%
SE20	Anerley, Penge	£387,819	£1,184	3.66%
SE21	Dulwich	£711,013	£1,606	2.71%
SE22	East Dulwich	£715,659	£1,563	2.62%
SE23	Forest Hill	£526,360	£1,327	3.03%
SE24	Herne Hill	£755,543	£1,571	2.50%
SE25	South Norwood	£352,403	£1,058	3.60%
SE26	Sydenham	£461,753	£1,260	3.27%
SE27	Tulse Hill, West Norwood	£548,485	£1,412	3.09%
SE28	Thamesmead	£280,329	£1,128	4.83%

South West London rental yields

Postcode	Areas covered	Average property price	Avg monthly rent	Avg yield
SW1	Belgravia, Pimlico, Westminster	£1,247,473	£2,410	2.32%
SW2	Brixton, Streatham Hill	£554,419	£1,591	3.44%
SW3	Brompton, Chelsea	£1,566,287	£2,042	1.56%
SW4	Clapham	£696,416	£1,785	3.08%
SW5	Earl’s Court	£1,048,197	£1,822	2.09%
SW6	Fulham, Parson’s Green	£940,882	£1,931	2.46%
SW7	South Kensington	£1,502,177	£2,523	2.02%
SW8	Nine Elms, South Lambeth	£676,758	£1,836	3.26%
SW10	Brixton, Stockwell	£1,021,465	£1,952	2.29%
SW11	West Brompton	£691,360	£1,859	3.23%
SW12	Battersea	£818,767	£1,814	2.66%
SW13	Balham	£1,202,996	£2,110	2.10%
SW14	Barnes	£947,237	£1,869	2.37%
SW15	East Sheen, Mortlake	£698,180	£1,609	2.77%
SW16	Norbury, Streatham	£510,667	£1,329	3.12%
SW17	Tooting	£635,768	£1,619	3.06%
SW18	Earlsfield, Wandsworth	£709,024	£1,740	2.94%
SW19	Merton, Wimbledon	£717,231	£1,539	2.57%
SW20	Raynes Park, South Wimbledon	£708,628	£1,479	2.50%

West London rental yields

Postcode	Areas covered	Average property price	Avg monthly rent	Avg yield
W1	Marylebone, Mayfair, Soho	£1,856,331	£2,556	1.65%
W2	Bayswater, Paddington	£1,015,422	£1,805	2.13%
W3	Acton	£555,717	£1,421	3.07%
W4	Chiswick	£843,631	£1,649	2.35%
W5	Ealing	£670,570	£1,396	2.50%
W6	Hammersmith	£844,430	£1,687	2.40%
W7	Hanwell	£545,280	£1,530	3.37%
W8	Kensington	£1,930,107	£2,245	1.40%
W9	Maida Vale, Warwick Avenue	£769,721	£1,869	2.91%
W10	Ladbroke Grove, North Kensington	£749,467	£1,517	2.43%
W11	Holland Park, Notting Hill	£1,450,633	£2,025	1.68%
W12	Shepherd’s Bush	£646,442	£1,472	2.73%
W13	West Ealing	£668,157	£1,387	2.49%
W14	West Kensington	£837,572	£1,732	2.48%

Selected outer London rental yields

Postcode	Areas covered	Average property price	Avg monthly rent	Avg yield
EN / N9	Enfield	£423,019	£1,241	3.52%
HA	Harrow	£465,167	£1,343	3.46%