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London rental yields are recovering from the pandemic

Em Morley - May 9, 2022

London rental yields are on the rise after a temporary pandemic slump, according to research by rental platform Rentd.

It says southern areas of the capital are providing particularly strong opportunities for buy-to-let landlords.

London’s property market was hit by a dip in demand during the pandemic, 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. 

This fall in demand caused rental values to dip and led to a fall in yields. However, with the London rental market improving, Rentd has seen yields increase again.

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.

Ahmed Gamal, Founder and CEO of Rentd, comments: “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.”