Developers plans to deliver total of 13,500 homes in West and South London in full swing

The latest on London property market: tenant demand and rental yields

When considering any property investment, rental yields and tenant demand are important considerations. So where are the strongest prospects for investors in the London property market?

Successive lockdowns and pandemic-induced employment changes have made it tricky for landlords and investors with properties in the capital. With the vaccination rollout having allowed restrictions to ease, the London property market is starting to look more positive.

Major lenders are offering low mortgage interest rates and raising their lending ceilings. And investors and landlords in the capital are now looking to improve their profitability and expand their property portfolios.

Sophie Durkin, regional director of Portico, says: “Thanks to the vaccination roll-out, Britain has been finally enjoying some return to normalcy. Rental demand has remained healthy and rental yields have consistently demonstrated a promising recovery through the past two quarters.

“Landlord instructions are also up 12% year-on-year, and tenant registrations have increased by a significant 22% from January 2021 to May 2021.”

Where are rental yields the strongest?

Rental yields vary widely depending on location and property type. And with recent tax and legislative changes, more investors are focusing on achieving strong rental yields. Data on average rental yields can provide prospective landlords an idea of what they could expect to achieve.

London estate agent Portico’s data analysis has revealed where are the best parts of the capital in terms of rental yields. Rental yields throughout outer London boroughs are showing signs of strength.

East London in particular is showing the greatest return for property investment in the capital. This part of the capital is the only region home to neighbourhoods with average rental yields at 6% or higher in Q2 of 2021.

Hotspots for commuting

The data is showing that commuting hotspots are generating particularly high yields, especially when compared to the rest of London. With offices starting to reopen, rental demand and yields in these popular spots for commuters are expected to remain strong. And areas that are set to benefit from Crossrail and other kinds of regeneration could see further growth in the future.

Within East London, Abbey Wood is leading the way with an average yield of 6.7% in Q2. According to Portico, there have been an influx of investors buying properties to let near the train station there. The Crossrail will bring 12 fast central London trains per hour. With the imminent arrival of this railway, Abbey Wood has become an appealing area.

Along the Beam River, also in East London, is another area seeing strong rental demand and yields. In particular, properties in the Dagenham Road area are appealing for commuters with a new national rail line proposed. This would provide direct services to Fenchurch Street station within 20 minutes. The average rental yield seen in the area is an impressive 6.3%.

Sophie Durkin comments: “Our latest rental yield research shows that there are certainly some healthy rental yields to be found in London – especially in areas experiencing significant regeneration and of course, those areas set to benefit greatly from Crossrail.

“East London is still the leading buy-to-let hotspot – and, as lockdown restrictions continue to ease, we expect demand from tenants to increase.”

Self-certified Sophisticated Investor

Please read

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:

I am a self-certified sophisticated investor because at least one of the following applies:

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me seek advice from someone who specialises in advising on non-mainstream pooled investments.

High Net Worth Investor

Please read

I make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me:


Sign up for first access to new developments and exclusive property investment opportunities.

We send limited and targeted emails on new launches and exclusive deals which best fit your areas. We are trusted by over 30,000 active buyers as their source for new stock.

  • New property developments
  • Professional market reports
  • Property deal alerts
  • Development updates
Manchester property investment


Receive trending news straight to your inbox and stay up to date on all of the property market trends and advice.

Established since 2005 we are a leading voice of authority and commentary on the UK property market. Our news is trusted by Apple News & Google News.

  • UK housing market
  • Mortgage & money
  • Buy-to-let landlords
  • Guides & advice

Talk to us

Speak to our UK property experts today:


+44 (0) 333 123 0320

Open from 9am-6pm GMT


+852 6699 9008

Open from 9am-6pm HKT