With rents in the capital still the highest in the country, we’ve taken a look into the best areas to buy-to-let in London.
When looking into the best buy-to-let areas in the UK, London will be a priority for many investors, despite rents dropping slightly over the past year.
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 rental yields in the capital are still the highest in the country – providing you invest in one of the best buy-to-let spots in London.
In general, east London offers the highest yields, while north London performs 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 six per cent. With well above average rental yields to be found from Chigwell all the way down to Northumberland Heath, east and north-east London continues to look particularly attractive for buy-to-let investors.
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 4.7 per cent or more, which is comfortably above the capital’s typical percentage.
A little further out, Ilford is one of the best places for capital gains in the whole country, let alone the capital, with gains of 17.04 per cent
And if you drop below the river you’ll find one of the best places in the whole of the UK for rental yield. Bexley boasts more affordable properties than more central locations, and rental yields for some properties are edging over 6.8 per cent. If that’s not enough to make you consider Bexley for your next investment, it also has one of the lowest average house prices of any of the London boroughs at £371,996.
In 2018, east London has really taken the lead in terms of rental yield. Areas from Stratford to Upminster have rental yields of at least five per cent, with Barking, Cranbrook, and Little Heath are all over six per cent.
Best buy-to-let areas in south London
Next to east London, the rest of the capital’s offerings pale a little, and rental yields in south London are down on what they were last year. In 2017, south London had yields of up to 5.3 per cent, while this year it’s down to 4.8.
This is still well above the average for the capital, though, and current fluctuations may not be representative of the long term trends.
2018 sees the extremities of the south giving the highest yields. Though Bexley is the star of the south east, Little Etham, St Paul’s Cray, and Foots Cray all have rental yields of up to 4.7 per cent.
This year, Whyteleafe was just pipped to the post for the best rental yields in the south, with 4.9 per cent to New Addington’s 5 per cent.
Unlike the east, where high yields can be found across the board, the further out you go, the higher the rental yields for south London. Towards the west, Thornton Heath and Wallington both have rental yields of up to 4.7 per cent.
If it’s capital gains you’re after, Bromley is the place to look in south London. This year gains for properties in this area are at 16.56 per cent.
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. It might currently have lower RoI than other areas of London, but 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 three 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.
And rental yield isn’t to be sneezed at either. Similar to other areas of london, the further out you go the better your rental yield, with areas like Hayes and Feltham offering average rental yield of five per cent and over.
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 three years, while popular neighbour Camden is set for 32.1 per cent growth, according to property company CBRE.
If you’re looking for capital gains in north London then your best bet could be Enfield. The town has the fourth highest gains in the UK this year at 16.97 per cent. It also boasts some of the highest rental yields in the north – and across the whole capital – with properties along its eastern edge creeping up to 5.7 per cent this year.
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.