COVID-19 has impacted the way tenants are now living, with many migrating from the centre of London to the outskirts. Home Made, a prop-tech company, created a comprehensive guide on London’s buy-to-let (BTL) rental yields. This guide was to help property investors know where their next property should be.
Having analysed thousands of property listings, Home Made has provided a rundown of the best performing postcodes. This data helps to predict how the current residential lettings market will fare for the future.
The results evaluated that London had faired ‘reasonably well’ during the pandemic. But rental yields have apparently emerged in a far stronger position in some locations over others. The further away from the centre of the city, the better as investors are seeing better returns on average.
For 1-bedroom, 2-bedroom and 3-bedroom properties as well as an overall view, here are the postcodes which are currently offering the best rental yields in London:
1-Bedroom Properties
- IG11 (Barking, Upney) – 6.12%
- N9 (Lower Edmonton) – 5.89%
- TW13 (Feltham, Twickenham) – 5.65%
- EN8 (Cheshunt, Waltham Cross) – 5.57%
- IG1 (Ilford) – 5.56%
- EN3 (Enfield) – 5.50%
- RM6 (Chadwell Heath, Goodmayes, Marks Gate, Little Heath) – 5.46%
- RM1 (Romford) – 5.43%
- RM7 (Romford, Dagenham, Hornchurch) – 5.39%
- IG2 (Gants Hill, Newbury Park, Aldborough Hatch) – 5.35%
2-Bedroom Properties
- UB1 (Southall) – 5.93%
- IG11 (Barking, Upney) – 5.64%
- EN3 (Enfield) – 5.52%
- RM6 (Chadwell Heath, Goodmayes, Marks Gate, Little Heath) – 5.48%
- N9 (Lower Edmonton) – 5.42%
- TW5 (Hounslow) – 5.39%
- N18 (Upper Edmonton) – 5.39%
- IG1 (Ilford) – 5.37%
- IG3 (Ilford, Cransbrook, Loxford) – 5.35%
- RM1 (Romford) – 5.33%
3-Bedroom Properties
- RM8 (Dagenham, Beacontree) – 5.13%
- RM9 (Dagenham, Beacontree) – 5.01%
- RM10 (Dagenham, Beacontree) – 4.90%
- IG11 (Barking, Upney) – 4.80%
- EN3 (Enfield) – 4.76%
- RM3 (Harold Wood, Harold Hill) – 4.64%
- N9 (Lower Edmonton) – 4.61%
- CR0 (Croydon) – 4.56%
- N18 (Upper Edmonton) – 4.54%
- CR7 (Thornton Heath) – 4.54%
Overall
- IG11 (Barking, Upney) – 5.13%
- RM10 (Dagenham, Becontree) – 4.97%
- RM9 (Dagenham, Becontree, Castle Green) – 4.94%
- RM8 (Dagenham, Becontree, Becontree Heath, Chadwell Heath) – 4.91%
- SE28 (Thamesmead, Greenwich, Bexley) – 4.88%
- E13 (Plaistow, West Ham) – 4.59%
- RM3 (Harold Wood, Harold Hill, Noak Hill, Harold Park) – 4.54%
- N9 (Lower Edmonton) – 4.44%
- E6 (East Ham, Beckton, Barking) – 4.40%
- RM6 (Chadwell Heath, Marks Gate, Little Heath, Goodmayes) – 4.35%
Looking through the data, it can be noted that the Eastern postcodes are the most attractive for yield. Those such as Barking and Dagenham occupy a number of the top spots across the four lists. Trends such as improved transport infrastructure, urban redevelopment, and consumer and renter behaviour relating to Covid are the main driving factors in this change.
Most importantly, this data can be used by investors to inform their strategy, says Home Made. Supply, demand, and seasonality need to be factored into a long-term plan for value creation. For example, a property let in January will not perform as well as a property let in August. The time of year and local market conditions are highly likely to affect the property’s full potential.
The residential lettings market has proven to be diverse and resilient over the years. And that is no more evident than when the pandemic hit during March of last year. While central London has been impacted a lot more severely, the outskirts have been relatively unaffected. Renters are expanding their horizons in search of new and different lifestyles. The future for the industry is looking bright, even despite everything that has happened so far in recent times.