The London property market is one of the world’s biggest investment locations. London property has long been seen as a prestigious and valuable asset and has attracted investors from around the world. Despite this, the London buy to let property bubble has burst over recent years leading many investors to abandon the capital and look to other UK cities, especially in the Northern Powerhouse. However, there are still opportunities out there for London property investors, so we take a look at the Best Rental Yields in London and elsewhere in the UK.
According to Totally Money, the best buy to let postcode in London was E6 – East Ham, which had an average rental yield of 4.81%. It was followed by E16 – Plaistow at 4.52% and Thameshead – SE28 at 4.48%. These areas are mainly in East London which shows a change from previous years. In fact six of the top 10 postcodes for buy to let rental yields were in East London, which is something that London property investors should consider. Other areas like Manor Park (E12) had a rental yield of 4.3% and Chingford and Stratford were barely different – with rental yields of 4.11% and 4.0%.
These rental yields might sound alright but compared to L7 in Liverpool which has a rental yield of 11.79% – the difference is obvious. Property investment firms like RW Invest look to Northern cities like Liverpool and Manchester where rental yields are far higher for their clients.
There are definitely up and coming areas that are expected to bring new opportunities for London property investors. Areas like Shepherd’s Bush look set to increase in popularity, with capital growth potential in store because of new business opportunities and leisure developments. Other areas in London such as Earls Court, Canary Wharf and Croydon are also predicted to experience growth by 2020. Whitechapel, Old Oak Park and East Ham are also predicted to make their mark on the London property investment map. This is due to several regeneration projects focussed in these areas, with plans for improved transport links, new home construction and redevelopment initiatives. Woolwich, in South East London is set to become a transport hub, and major regeneration efforts have led to 5000 new homes and two new train stations. Property is still relatively affordable there, for London prices at least.
There has been reassurance from property experts who think that the London property market will recover, but it doesn’t look likely for at least two years. Some predict that areas in London will reach rental yields as high as six per cent by 2020. The typical gross yield in London is currently 3.7%, which means that for now, property in other areas of the UK are outperforming London based on rental yields.
London property holds its own when it comes to capital appreciation, and in that area it does perform well, with the average property price growing from £115,000 in 1998 to £671,412 in 2018. London has a huge population, a high demand for rental property and the highest rental rates in the country so there are a number of reasons why investors choose London property to invest in. London property investors who are looking for high rental yields would be wise to consider up and coming areas with new developments planned, the above East London postcodes or consider other cities in the UK where rental yields really are impressive.