Though the majority of the capital offers relatively low rental yields of between 3-4%, there are still some London postcodes that provide landlords with very healthy rental yields…
Estate agent Portico has developed an Interactive Yield Map that gives landlords an indication of the potential income they could earn in all London postcodes.
If you’re considering a property investment in the capital, here are the top 10 London postcodes for buy-to-let this summer:
- Barking: 6.4%
- Erith: 6.4%
- Ilford: 6.1%
- Dagenham: 5.9%
- Edmonton: 5.8%
- Canning Town: 5.7%
- Beckton: 5.7%
- Romford: 5.6%
- Ponders End: 5.6%
- Freezywater: 5.6%
Mark Lawrinson, the Regional Director of Portico, has explained why each location is a great bet for investors:
- Barking – Zone 4
Highest potential yield: 6.4%
Average two-bedroom house price: £270,000
“Barking has been enjoying time in the spotlight ever since it was named the host borough for the London 2012 Olympics. Since then, a number of renovation projects have been transforming the east London town, most notably the Barking Riverside regeneration project, which is creating a brand new neighbourhood with 10,800 homes on the former power station site.”
- Erith – Zone 6
The Top 10 London Postcodes for Buy-to-Let
Highest potential yield: 6.4%
Average two-bedroom house price: £290,000
“Erith is a town next to the River Thames, situated east of Belvedere in Bexley. Its remoteness has kept property prices in the area relatively low, but now a ripple of regeneration is spreading from nearby Abbey Wood and neighbouring Woolwich, two big Crossrail winners.
“Developers are now moving into the area, reviving redevelopment plans for the riverfront area of Erith, renamed the Erith Western Gateway.”
- Ilford – Zone 4
Highest potential yield: 6.1%
Average two-bedroom house price: £300,000
“Ilford will be one of the first stops to test the new Crossrail trains as they are introduced along the Liverpool Street to Shenfield line this month. New trains will take residents into central London in 25 minutes and to business hub Canary Wharf in just 17 minutes, making it extremely attractive to renters or homebuyers looking for accessibility and affordability. Though property prices have shot up since the news of Crossrail, the average two-bedroom property still stands at a reasonable £300,000 or £1,100 per calendar month.
“We expect the area to undergo significant regeneration and gentrification over the next five to ten years.”
- Dagenham – Zone 5
Highest potential yield: 5.9%
Average two-bedroom house price: £290,000
“Dagenham, like its inner London neighbours Hackney, Shoreditch and Bethnal Green, has changed dramatically in recent years, and there are also further redevelopment plans in the pipeline.
“Within 20 years, some 35,000 new homes will be built in the area, with regeneration expected to create 10,000 new jobs. Furthermore, Crossrail will soon begin operating from nearby Chadwell Heath, making getting in and out of central London quicker and easier. These factors will no doubt attract a new wave of renters and homebuyers to the area.”
- Edmonton – Zone 4
Highest potential yield: 5.8%
Average two-bedroom house price: £270,000
“This investment hotspot in north London has big plans for its future; Edmonton Green is set to benefit from a £1.5 billion Meridian Water regeneration scheme, which will eventually deliver 10,000 new homes and 6,700 new jobs on 210 acres of former industrial land on the beautiful banks of the River Lea.
“London Mayor Sadiq Khan declared the scheme a ‘win-win’, because land left derelict would be brought back into use to help solve the capital’s chronic housing shortage, while many of the workforce constructing it would be local residents equipped with the skills as part of apprenticeship and training programmes. Construction on the first 725 of those new homes is now underway.”
- Canning Town – Zones 2/3
Highest potential yield: 5.7%
Average two-bedroom house price: £600,000
“Canning Town is one of London’s last affordable areas – and it’s getting a facelift. A £3.7 billion regeneration scheme is building 10,000 new homes and two new town centres, which will help to attract more young professionals to the area who are working in nearby Canary Wharf.
“For those commuting into central London, Custom House, which is just a 20-minute walk away, will be served by the Elizabeth line in 2018.”
- Beckton – Zone 3
Highest potential yield: 5.7%
Average two-bedroom house price: £350,000
“Property prices in Beckton have increased by nearly 25% in the last two years, but the average house price still stands well below the London average, at £328,460.
“The area is experiencing significant regeneration, and is located perfectly for those working in the City and Canary Wharf.”
- Romford – Zone 6
Highest potential yield: 5.6%
Average two-bedroom house price: £290,000
“Romford, the largest of seven town centres in the London borough of Havering, is a top investment hotspot where landlords are achieving extremely impressive yields. When Crossrail arrives in 2017, it will not only improve Romford’s connectivity to the South East and central London, but also bring with it a multitude of opportunities and exciting developments, no doubt increasing demand for property in the area.”
- Ponders End – Zone 5
Highest potential yield: 5.6%
Average two-bedroom house price: £285,000
“We’re seeing an increasing number of people venture further out of London to get more space for their money, and Enfield is definitely a popular choice.
“Ponders End, a district within the borough, has significant potential for redevelopment and is just a 20-minute train ride from London Liverpool Street station. It’s also a proposed Crossrail 2 station, which would really throw the district into the spotlight and hike up property prices in the area.”
10. Freezywater – Zone 6
Highest potential yield: 5.6%
Average two-bedroom house price: £329,995
“Freezywater is another area in Enfield that offers a very healthy rental yield. There’s a high proportion of renters living in the area and a one-bedroom property goes for around £900 per month.
“The area lacks great transport connections, but residents are just a 15-minute walk from Enfield Lock station, which offers direct trains into central London. There’s also a good mix of both houses and flats, making it an attractive area for professional couples and people looking to start a family.”
Although these London postcodes are the best places to invest in the capital nowadays, a recent study revealed which locations have provided the strongest capital gains over the past 20 years: /house-prices-london-boroughs-soar-500/
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