London Rental Yields Start to Climb as Pandemic Rental Freeze Thaws

New research has revealed that London rental yields are still on the rise after a temporary pandemic slump, with southern areas providing particularly strong opportunities for buy-to-let landlords.

While much of the nation’s property market enjoyed a boom during the pandemic, London’s market was hit by a dip in demand as people prioritised green, open space over urban living.

This, alongside a reduced need to commute to the office, created a drop in demand for rental homes in England’s biggest city.

National Landlord Investment Show – MPU

For landlords, this fall in demand caused rental values to dip and therefore led to a fall in yields.

But, as the impact of the pandemic fades, people are returning to the capital and this has resulted in an uptick in a sharp return to form for the London rental market

In the past year alone, average yields have climbed by 0.3%, from 3.3% to 3.6%.

However, there are a good number of areas where yields have climbed more dramatically.

In the SE17 outcode area around Walworth, yields have increased by 1.4%, from 4% to 5.4%; and up in Hampstead Heath’s NW3 area, they’re up 1.1% from 2.9% to 4%.

In the Forest Gate area of E7, yields have increased by 1%, from 3.7%-4.7%, and the same increase applies to both SE16 and SE8.

In E9, SE4, SE5, CR4, and EN4 respectively, yields have increased by 0.9% on the year.

Founder and CEO of the London rental platform behind the research, Rentd, Ahmed Gamal, commented:

“The capital’s rental market is showing a solid return to form after a slightly concerning dip in the early days of the pandemic.

It was probably a little naive to think that renters would reject London in the long-term.

It is, after all, one the greatest cities on earth and the opportunities it presents are unmatched in the UK.

It’s interesting to see the south of the city enjoying much of the strongest yield growth, suggesting that, while people are still happy to live in a major city, they also want to maintain easy access to the green and coastal locations easily accessible from the south.

Table shows average house price, rent value, and subsequent yield in London for April 2021 and April 2022, alongside % change
Area Ave price – April 2021 Ave rent – April 2021 Ave yield – April 2021 Ave price – April 2022 Ave rent – April 2022 Ave yield – April 2022 Change rental yield – 2021 vs 2022
London £527,853 £1,461 3.3% £560,680 £1,686 3.6% 0.3%
Table shows ten biggest annual rental yield changes (April 21 to April 22) in London outcode areas alongside % change
Outcode Ave yield – April 2021 Ave yield – April 2022 Change %
SE17 4.00% 5.40% 1.40%
NW3 2.90% 4.00% 1.10%
E7 3.70% 4.70% 1.00%
SE16 3.90% 4.90% 1.00%
SE8 3.70% 4.70% 1.00%
E9 3.70% 4.60% 0.90%
SE4 3.10% 4.00% 0.90%
SE5 3.80% 4.70% 0.90%
CR4 3.60% 4.50% 0.90%
EN4 2.30% 3.20% 0.90%

Yield data by postcode sourced from Property Data

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