Knowing the average rent in London is important for buy-to-let landlords, especially if you’re thinking about purchasing a property somewhere within its sprawling cityscape.
The rent you receive will be offset by your buy-to-let mortgage, if you have one. But understanding rent prices in London also helps you work out potential rental yield, as well as set prices that influence who your property (or properties) will appeal to. Keep in mind that rent prices can also determine how quickly your property is let.
Plus, the extension of the stamp duty holiday means you could potentially save thousands if you’re expanding your property portfolio in the coming months.
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According to HomeLet, the average rent in London for new tenancies is £1,572 a month. HomeLet also says that rents in London have decreased by 4.7 per cent compared to last year.
But rents can of course vary depending on lots of factors, including the location and number of bedrooms.
Below we take a look at London rent prices based on the location and number of bedrooms. They’re based on statistics from the Office for National Statistics (ONS), covering October 2019 to September 2020.
You can use this article as a guide and a springboard for conducting your own research into good locations for buy-to-let properties.
Use the interactive map below from the Valuation Office Agency to see the median monthly private rental price in England, by local authorities and bedroom category.
For a more detailed map of London rent prices, visit london.gov.uk and explore average rent by postcode.
The rental market slowed due to the impact of Covid-19, and London has been one of the hardest hit cities over the last 12 months. There are many reasons for this, including fewer international students, tourists, and people travelling for business. There has also been a general desire to move out of cities into areas with more space.
A study from estate agents Hamptons International in May last year found the biggest drop in rental prices in Zones 1 to 3, as reported by the Evening Standard.
That said, while central areas are showing a decline in average rental price, some outer London boroughs are showing rental growth. This has been dubbed ‘the halo effect’ with a report from Zoopla showing rents rising in areas like Havering and Enfield.
Single rooms and one bedroom and studio properties are often popular with young professionals moving to the capital or deciding to strike out on their own.
Low rental prices can often be a boon for these sorts of properties, as they’re likely to appeal to those who are renting by themselves – depending on location, of course.
Bexley, Havering and Sutton have some of the lowest average rents in the capital for rooms, studio and one bedroom properties. If you’re looking to appeal to young professionals, properties in those areas with good transport links could be a worthwhile investment.
As you might expect, the highest average rents in London for rooms, studio and one bedroom properties can be found much closer to the centre. Kensington and Chelsea, Camden, Westminster, and the City of London all place highly for these properties.
These are the areas in London with the highest average monthly rent for studio and one bedroom properties.
|Kensington and Chelsea||£1,427||£2,062|
These are the areas in London with the lowest average monthly rent for studio and one bedroom properties.
|Barking and Dagenham||£729||£981|
Also Bromley and Hounslow areas also feature some low average rental prices for studio and one bedroom properties in London.
Two and three bedroom properties have a varied audience. From families to sharers, the type of tenants you’re likely to get in these properties will depend more on other features (such as outdoor space and bedroom size) as well as local services.
For these types of properties, Bexley, Havering and Sutton again have some of the lowest average rents. Lots of east London boroughs also have low rents for two and three bedroom properties – areas like Barking and Dagenham, Redbridge, and Waltham Forest (in the north east of the capital).
But east London is one of London’s buy-to-let hotspots as, though the rental prices are low, the yield is high. A simple way to calculate rental yield is by taking the yearly rental income and dividing it by the purchase price and costs. In east London, Stratford and East Ham have some great rental yields. And across the river to south-east London, the aforementioned Bexley is great for rental yield too.
At the other end of the spectrum, Kensington and Chelsea, Camden and the City of London all feature again for two and three bedroom properties, as do Hammersmith and Fulham, Hackney and Islington.
These are the areas with the highest average monthly rent prices in London for two and three bedroom properties.
|Location||Two bedroom||Three bedroom|
|Kensington and Chelsea||£3,030||£4,938|
|Hammersmith and Fulham||£1,922||£2,653|
These are the areas in London with the lowest average monthly rent for two and three bedroom properties.
|Location||Two bedroom||Three bedroom|
The Romford area also features in the list of lowest rent prices, as well as Dartford if you’re looking further afield (Dartford is technically classified as Kent).
Four or more bedroom properties can be trickier to rent, and are often more likely to be occupied by students and sharers than families. If you do rent to multiple sharers (even if your property is smaller than four or five beds) then you may legally be required to have an HMO license, so speak to the local authority when considering purchasing a property of that size.
The usual suspects featured above also dominate the highest and lowest average monthly rents for four or more bedrooms. Newham and Greenwich are other areas with low averages for these types of property, with Wandsworth, Lambeth and Barnet also featuring high in the table.
These are the areas in London with the highest average monthly rent for four or more bedroom properties.
|Location||Four or more bedrooms|
|Kensington and Chelsea||£7,585|
|Hammersmith and Fulham||£4,780|
For other locations with high average London rents, there’s Richmond, Lambeth and Hackney.
These are the areas in London with the lowest average monthly rent for four or more bedroom properties.
|Location||Four or more bedrooms|
|Barking and Dagenham||£1,655|
Do you have a buy-to-let property in London? Let us know in the comments.
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22 June 2020 • 9-minute read
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