With rents in the capital continuing to boom, we’ve taken a look into the best areas to buy-to-let in London.
However, with impressive capital gains and unparallelled return on investment opportunities, when we’re talking about buy-to-let hotspots, London can’t be ignored.
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Best areas for buy-to-let in London
In terms of overall best buy-to-let return, London is the standout part of the country to invest.
With ever-soaring property prices, capital growth is - somewhat inevitably - far higher on average in London than anywhere else in the UK.
However, for those landlords in the capital not looking to sell their buy-to-let property any time soon, the good news is that fantastic rental yields are also available - providing you invest in one of the best buy-to-let spots in London.
In general, east and south London offer the highest yields, with west London performing well for capital gains.
Best buy-to-let spots in east London
East London boasts some of the highest yields in the UK, with highs of over seven per cent.
It can also lay claim to many of the best buy-to-let postcodes London has to offer.
Newham - a borough still suffering from a less-than-ideal reputation - is a particularly interesting area to invest. With Stratford’s vast regeneration ongoing since London 2012, the area has an average rental yield of 4.5 per cent or more, which is comfortably above the capital’s typical percentage.
Also in Newham, East Ham has the third highest return on investment percentage of any London area. Its 29.4 per cent ROI is calculated by looking at the average price of a two-bedroom flat, the annual asking price change and the average annual rental income for the area.
However, look a little further east in the likes of Rainham, Dagenham and Romford and you’ll be able to find more affordable property and average rental yields easily over 5.5 per cent.
Best buy-to-let areas in south London
South and south east London are home to many of the best buy-to-let deals in London.
With yields of up to 6.7 per cent, south London - yet to claim the trendy reputation of neighbouring east London (Brixton et al aside) - can offer some of the best buy-to-let yields in London.
Many areas that are south of the river, yet still reasonably central, rank among the best buy-to-let investment areas London has to offer.
Southwark and Lambeth are in the midst of huge regeneration projects, and property prices could soar in the coming years. According to the Telegraph, Lambeth is also home to the best buy-to-let location in London - Oval. An overall ROI in property of over 31.3 per cent makes the south-central area an ideal place to invest, should you be able to afford to.
Further south in Sutton, meanwhile, rents may rise by a dizzying 32.9 per cent in the next five years as it becomes more popular.
Best areas for buy-to-let in west London
If it’s capital gains that you’re after, then look west for your best buy-to-let investments in London. Property prices in west London have increased by an incredible 13.8 per cent a year since 2010.
West London borough Merton - home to sought-after Wimbledon Village - has been labelled by some as the best of all buy-to-let hotspots in London, with 33.8 per cent rental growth expected in the next five years.
Indeed, even Richmond-upon-Thames - an area known for having some of the most expensive property prices in the whole country - is expected to see rental growth of 33 per cent.
Best buy-to-let areas in north London
For many property investors, north London won’t spring too many surprises.
With good transport links into the city and residential areas with established reputations, expect property prices to be high. However, these factors also mean high rental demand.
Islington, for example, could see a 33.5 per cent uplift in rents over the next five years, while popular neighbour Camden is set for 32.1 per cent growth, according to property company CBRE.
What should you look for in a London buy-to-let area?
With a city as expansive and diverse as London, it can be tricky knowing where to look. Uncovering the next hidden gem takes research, local knowledge and more than a hint of luck.
However, keep these five things in mind and you’ll be on the right track:
- Transport links
- Schools in the area
- Regeneration projects and plans
- Local amenities - shops, bars, restaurants etc.
- Distance to universities and/or work hubs
Have you recently invested in buy-to-let property in London? We’d love to hear from you below.