5 Places to Invest in London Property for 2022 – For Landlords￼
May 19, 2022
If you’re investor looking to invest in the London Property Market, what are the best areas in London that will ensure your investment gives you the best yield? These are the top 5 areas in London that I recommend to landlords to invest.
What is rental yield and how is it calculated?
The rental yield is calculated by dividing your annual rental income by your total investment, then multiplying this by 100. As an example, if you buy a house for £800,000 and rent it for £3,000per month, your rental yield is 4.5%.
What is the average rental yield in London?
Yields fluctuate from region to region. In greater London, the average yield is in the range of 3.5 – 4.5%. Other parts of the UK generally offer higher yields. For example in Birmingham, yields average around 7%
What’s the Latest in the London Rental Market?
To give a current sense of what is happening in London, The impact of Covid-19 on the London rental market remains clear, up through Feb 2022 the City of London seeing one of the largest annual declines along with Westminster at -0.8%. The City of London has also seen the largest decline when compared to pre-pandemic yields, with a -1.5% drop.
According to Property Notify, In the past year alone, average yields have climbed by 0.3%, from 3.3% to 3.6%.
In the SE17 postcode 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%.
Some of the best yields have been in both Newham and Tower Hamlets with an average yield of 4.5%, with Barking and Dagenham (4.4%), Greenwich (4.1%), Lambeth, Hounslow and Southwark (3.8%) also sitting above the London average.
Overall outlook for London rental yields is positive as we have seen record breaking increases to rental rates since late last summer.
Here are 5 places in London to consider for strong rental yield.
This large north London town, made famous for being home to the popular football team, the Tottenham Hotspurs, is a stand-out investment option for 2022.
It has benefited from significant regeneration works in recent years, the latest round being the new Tottenham Hotspur Stadium located on White Hart Lane. Additionally, plans are underway to build new homes at Tottenham Hale, and an impressive Tottenham Hale station upgrade should complete by the end of next year.
Tottenham’s transport and rail links are already strong; however, the property market has experienced slower growth than its borough of Haringey as a whole, leaving plenty of opportunity for some great returns on investment (ROI).
For example, average property prices across Haringey rose by more than 10% in 2020 – a further 4% in the last year – and currently sit at £693,870. Tottenham, meanwhile, is sitting at £515,474, leaving significant room for equity growth for anyone looking to invest. Average yields are estimated at 4.5%.
When it comes to value for money, it doesn’t get much better than Barking. The average price of a property in Barking is well under London averages, yet significant regenerations are promising future growth.
Currently, the average price of a house in Barking is £357,796. The town of Barking, nestled in the borough of Barking & Dagenham, lies just 10 miles east of the city centre, with excellent transport links including the Hammersmith & City and District Lines. [show Barking location on map]
In addition, the Riverside Overground station and the Thames Clipper ‘Uber Boat’ service are opening in 2022.
The regeneration works include over a thousand new homes in Abbey Quay, a new restaurant, retail outlets, and a gymnasium adjacent to Abbey Green Park and the River Roding.
Seven Sisters is a district that sits a little closer to central London than Tottenham and partially encompasses a conservation area.
The area is supposedly named after seven local sisters who planted seven elm trees in a circle that created a thoroughfare between Tottenham and Camden. It has close proximity to Walthamstow and Stoke Newington, which have also improved significantly to become highly desirable residential areas.
Current average house prices in Seven Sisters is at approximately £479,020 according to Rightmove. It’s a quiet, diverse area, and while it may not have quite as much going on as its neighbouring districts, Seven Sisters offers a relatively affordable London living with a host of vibrant areas in close reach. Yields are estimated at around 4.4%
If money is no object and you just want to be central, Bloomsbury might be a great place to invest.
Ideally situated within walking distance to Piccadilly, Metropolitan, Circle, Hammersmith & City and Northern Line stations, Bloomsbury is so very well connected to almost any part of London. And things could get even better as the completion of Crossrail will link it to places further afield such as Reading and Shenfield. The new line is also resulting in a revamp of the nearby area of Tottenham Court Road.
Often overlooked because of its close proximity to places like King’s Cross and Holborn, Bloomsbury could be ideal if you’re able to spend the money. And it’s still about £500 cheaper per square foot than neighbouring Fitzrovia, and definitely considerably cheaper than nearby Camden.
With an average property price of £1,892,754 and average rent of £4,877 per month, this generates a yield of 3.0%
Best known for the quaint village atop the hill and one of the country’s finest boarding schools, it’s fair to say Harrow is a unique part of London.
With no fewer than four Prime Ministers educated at prestigious HarrowSchool, Harrow-on-the-Hill has played a key part in British history – not least because Winston Churchill was one of those famous alumni.
Harrow is one of north London’s most vibrant communities, with single professionals taking advantage of great flats and modern developments, as well as transport links into central London, and families flocking to the area for its large detached homes and great
With an average property value of £492,955 and average rent £1523 per month, this calculates to an average rental yield of 3.7%.