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

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

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%



Now find out…

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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%


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Further reading…

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The best buy to let areas of London revealed

Everything landlords can expect from the property market in 2021