Authored by the expert who managed and guided the team behind the United Kingdom Property Pack
Yes, the analysis of London's property market is included in our pack
If you're thinking about investing in London property, understanding rental yields is one of the most important things you can do before making any decision.
In this article, we break down everything you need to know about rental yields in London, from average returns to which neighborhoods deliver the best income.
We constantly update this blog post to reflect the latest data and market conditions in London's rental market.
And if you're planning to buy a property in this place, you may want to download our pack covering the real estate market in London.
Insights
- London's average gross rental yield sits at around 5.0% in early 2026, but this figure can jump to 5.7% if you focus on new-let asking rents rather than the broader stock of existing tenancies.
- The gap between gross and net yields in London is unusually wide because leasehold service charges alone can eat up 0.4% to 0.5% of your property's value each year before any other costs.
- Prime central London neighborhoods like Kensington and Mayfair often yield just 3% to 4% gross, while outer areas like Barking and Woolwich can push past 6% to 7%.
- A "good" gross yield in London starts at 5.5% or higher, which is meaningfully above the citywide average and compensates for the capital's higher operating costs.
- Void periods in London average around 23 days between tenancies, which translates to roughly 2% to 4% of your annual rental income lost to vacancy.
- Full-service property management in London typically costs 15% to 20% of rent, plus VAT, making it one of the largest recurring expenses for hands-off landlords.
- Smaller units like studios and one-beds consistently deliver higher yields per square meter in London because renters prioritize location over space.
- Transport-led regeneration projects like Old Oak Common and the Silvertown Tunnel are expected to shift renter demand and boost yields in East and Southeast London.
What are the rental yields in London as of 2026?
What's the average gross rental yield in London as of 2026?
As of early 2026, the average gross rental yield across all residential property types in London sits at approximately 5.0%, calculated by dividing annual rent by purchase price using official government data.
The realistic range for most typical London properties spans from about 4.5% to 5.7%, with the lower end reflecting existing tenancies and the higher end capturing what landlords can achieve with new lettings at current asking rents.
This puts London roughly in line with or slightly above the UK national average, though it remains lower than many regional cities where property prices are more affordable relative to rents.
The single biggest factor shaping gross yields in London right now is the wide gap between property prices (averaging around £547,000) and rents (averaging around £2,270 per month), which means even small shifts in either variable can move yields noticeably.
What's the average net rental yield in London as of 2026?
As of early 2026, the average net rental yield in London across all property types is approximately 3.4%, after accounting for typical operating costs and vacancy.
This means London landlords typically lose around 1.5 to 1.6 percentage points between gross and net yield, which is a larger gap than in most UK cities due to higher service charges and management costs.
The expense that most significantly erodes gross yield in London is leasehold service charges for flats, which average around £2,340 per year and can represent nearly half a percentage point of property value on their own.
Most standard investment properties in London fall within a net yield range of 2.8% to 4.1%, with the variation depending on whether you self-manage or use full-service agents, and whether you own a freehold house or a leasehold flat with high service charges.
By the way, you will find much more detailed rent ranges in our property pack covering the real estate market in London.
We made this infographic to show you how property prices in the UK compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
What yield is considered "good" in London in 2026?
In London's property market in 2026, a gross rental yield of 5.5% or higher is generally considered "good" by local investors, as it sits meaningfully above the citywide average and provides a cushion against the capital's higher costs.
The threshold that typically separates average-performing properties from high-performing ones is around 5.5% gross, with anything above 6% considered strong and anything pushing 7% considered excellent for London standards.
How much do yields vary by neighborhood in London as of 2026?
As of early 2026, gross rental yields in London range from roughly 3% in prime central areas to around 7% in more affordable outer boroughs, creating a spread of about 4 percentage points across the city.
The highest-yield neighborhoods in London tend to be well-connected outer or edge-of-inner boroughs where prices remain accessible but renter demand stays strong, such as Stratford, Plaistow, Barking, Woolwich, and parts of Croydon.
The lowest-yield areas are the ultra-prime central neighborhoods where property values are exceptionally high but rents don't keep pace, including Kensington, Chelsea, Knightsbridge, Mayfair, and Hampstead.
The main reason yields vary so dramatically across London is that property prices in prestige areas can be three or four times higher than in outer zones, while rents only differ by perhaps 50% to 100%, which compresses yields in prime locations.
By the way, we've written a blog article detailing what are the current best areas to invest in property in London.
How much do yields vary by property type in London as of 2026?
As of early 2026, gross rental yields in London range from around 4% for large family homes in prime areas to 6% or more for compact studios and one-beds in well-connected rental zones.
Studios and one-bedroom flats currently deliver the highest average gross yields in London because they command strong rents relative to their purchase price, especially near transport hubs.
Large period houses and family homes in prestige catchments tend to deliver the lowest gross yields because their prices reflect premium land values and lifestyle appeal rather than pure rental income potential.
The key reason yields differ by property type in London is that purchase prices scale faster than rents as you move up in size and quality, plus leasehold flats carry service charges that can significantly reduce net returns even when gross yields look reasonable.
By the way, you might want to read the following:
What's the typical vacancy rate in London as of 2026?
As of early 2026, the typical residential vacancy rate in London translates to roughly 2% to 4% of the year when your property sits empty, based on void periods between tenancies.
Across different London neighborhoods, vacancy rates can range from under 2% in high-demand transport hubs to around 5% in less connected or oversupplied areas.
The main factor driving vacancy rates in London right now is rental affordability and pricing strategy, with sensibly priced properties in good locations filling quickly while overpriced units can sit empty for weeks.
London's vacancy rate remains lower than the UK average because persistent renter demand from young professionals, students, and workers keeps the market tight, even as new supply has increased since 2019.
Finally please note that you will have all the indicators you need in our property pack covering the real estate market in London.
What's the rent-to-price ratio in London as of 2026?
As of early 2026, the average rent-to-price ratio in London is approximately 0.42% per month, meaning monthly rent equals about 0.42% of the property's purchase price.
For buy-to-let investors in London, a rent-to-price ratio above 0.45% per month (or 5.4% annually) is generally considered favorable, and this ratio is simply the gross rental yield expressed differently.
Compared to other major global cities, London's rent-to-price ratio sits in the middle range, lower than high-yield markets like some northern UK cities but higher than ultra-expensive markets like Hong Kong or Monaco where capital appreciation dominates over rental income.
We have made this infographic to give you a quick and clear snapshot of the property market in the UK. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
Which neighborhoods and micro-areas in London give the best yields as of 2026?
Where are the highest-yield areas in London as of 2026?
As of early 2026, the top three highest-yield neighborhoods in London are Barking and Dagenham, Newham (especially Stratford and Plaistow), and parts of Southeast London including Woolwich and Thamesmead.
In these top-performing areas, average gross rental yields typically range from 5.5% to 7%, with some well-bought properties in Barking or East Ham pushing even higher.
The main characteristic these high-yield London areas share is relatively affordable purchase prices combined with solid transport links and strong renter demand from commuters and young professionals who cannot afford inner London.
You'll find a much more detailed analysis of the areas with high profitability potential in our property pack covering the real estate market in London.
Where are the lowest-yield areas in London as of 2026?
As of early 2026, the three lowest-yield neighborhoods in London are Kensington and Chelsea (including Knightsbridge and South Kensington), Westminster (especially Mayfair and Belgravia), and parts of Camden like Hampstead.
In these prime areas, average gross rental yields typically range from just 2.5% to 4%, with some ultra-prime properties yielding even less.
The main reason yields are compressed in these London neighborhoods is that property prices are extraordinarily high due to prestige, scarcity, and international buyer interest, while rents, though also high, simply cannot keep pace proportionally.
Buying a property in a low-yield area is one of the mistakes we cover in our list of risks and pitfalls people face when buying property in London.
Which areas have the lowest vacancy in London as of 2026?
As of early 2026, the three London neighborhoods with the lowest residential vacancy rates are Canary Wharf and Isle of Dogs, Stratford, and the King's Cross and Bloomsbury corridor.
In these low-vacancy areas, properties typically sit empty for less than two weeks between tenancies, translating to vacancy rates under 2% annually.
The main demand driver keeping vacancy low in these London areas is their concentration of major employers, excellent transport connections, and proximity to universities or hospitals that generate consistent year-round renter demand.
The trade-off investors face when targeting these low-vacancy areas is that the strong demand often pushes purchase prices higher, which can compress gross yields even as occupancy stays near 100%.
Which areas have the most renter demand in London right now?
The three London neighborhoods experiencing the strongest renter demand in early 2026 are Shoreditch and Hackney (popular with young professionals), Clapham and Brixton (value-seeking commuters), and Canary Wharf and Greenwich (finance workers).
The dominant renter profile driving demand in these areas is young professionals aged 25 to 40, often working in tech, finance, or creative industries, who prioritize commute times and vibrant local amenities over space.
In these high-demand London neighborhoods, well-priced rental listings typically receive multiple inquiries within days and get let within one to two weeks of going live.
If you want to optimize your cashflow, you can read our complete guide on how to buy and rent out in London.
Which upcoming projects could boost rents and rental yields in London as of 2026?
As of early 2026, the three most significant projects expected to boost London rents are the Old Oak Common transport hub (HS2 and Elizabeth line), the Silvertown Tunnel improving East-Southeast connectivity, and the ongoing Barking Riverside development.
The neighborhoods most likely to benefit from these projects include Park Royal and Acton (near Old Oak), Silvertown and Greenwich Peninsula (near the tunnel), and Barking Riverside itself as it continues to densify.
Once these projects are fully operational, investors might realistically expect rent increases of 5% to 15% in the most directly affected areas, though this will play out gradually over several years as accessibility improvements attract more renters.
You'll find our latest property market analysis about London here.
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What property type should I buy for renting in London as of 2026?
Between studios and larger units in London, which performs best in 2026?
As of early 2026, studios and one-bedroom flats generally outperform larger units in London on both rental yield and occupancy because they are more affordable for the city's large population of single renters and couples.
Studios in well-connected London areas typically yield 5% to 6% gross (around £1,200 to £1,500 per month rent, or $1,500 to $1,900 USD, or €1,400 to €1,750 EUR), while two-bed and larger units often yield 4% to 5% gross despite higher absolute rents.
The main factor explaining this difference is that London property prices jump significantly with each additional bedroom, but rents do not increase proportionally because most renters are constrained by affordability rather than space preferences.
However, larger units can be the better investment in family-oriented outer boroughs like parts of Lewisham, Bromley, or Enfield, where stable families on multi-year tenancies reduce turnover costs and void periods.
What property types are in most demand in London as of 2026?
As of early 2026, modern one and two-bedroom flats in well-connected locations are the most in-demand property type among London renters.
The top three property types by current renter demand in London are: first, modern apartments near tube or rail stations; second, refurbished period flats with good natural light; and third, compact houses in commuter-friendly outer zones.
The primary demographic trend driving this demand pattern is the combination of remote and hybrid work (making a usable second room valuable) with continued pressure on household budgets (making energy-efficient, lower-bill properties more attractive).
One property type currently underperforming in demand is large, older houses in areas with poor transport links, which struggle to attract renters willing to pay the higher rents needed to justify their purchase prices.
What unit size has the best yield per m² in London as of 2026?
As of early 2026, the unit size that delivers the best gross rental yield per square meter in London is typically between 25 and 45 square meters, which corresponds to studios and compact one-bedroom flats.
These optimal-sized units in London generate roughly £50 to £70 per square meter per month in rent (approximately $65 to $90 USD, or €60 to €80 EUR), compared to £35 to £50 per square meter for larger two and three-bedroom units.
The main reason smaller units outperform on yield per square meter is that London renters pay a premium for location and convenience rather than space, so the first 30 square meters command far more rent per meter than the additional space in larger units.
By the way, we also have a blog article detailing whether owning an Airbnb rental is profitable in London.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in the UK versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
What costs cut my net yield in London as of 2026?
What are typical property taxes and recurring local fees in London as of 2026?
As of early 2026, the main recurring "property tax equivalent" for most London rental properties is the service charge for leasehold flats, which averages around £2,340 per year (approximately $2,950 USD or €2,700 EUR) according to official government surveys.
Other recurring fees London landlords should budget for include ground rent (where applicable, though often minimal), selective licensing fees in certain boroughs (typically £500 to £1,000 over five years), and building insurance if not included in the service charge.
Combined, these taxes and fees typically represent around 8% to 12% of gross rental income for a London flat, though this varies significantly based on the specific building's service charge level.
By the way, we cover all the hidden fees and taxes in our property pack covering the real estate market in London.
What insurance, maintenance, and annual repair costs should landlords budget in London right now?
Annual landlord insurance for a typical London rental property costs around £200 to £400 (approximately $250 to $500 USD or €230 to €460 EUR), varying based on property value, location, and coverage level.
London landlords should budget approximately 0.5% of property value per year for maintenance and repairs, which translates to around £2,500 to £3,000 (approximately $3,150 to $3,800 USD or €2,900 to €3,500 EUR) for an average-priced property.
The repair expense that most commonly catches London landlords off guard is boiler replacements or heating system failures, which can cost £2,000 to £4,000 and often happen without warning in older buildings.
In total, landlords should realistically budget £3,000 to £4,000 per year (approximately $3,800 to $5,000 USD or €3,500 to €4,600 EUR) for the combined costs of insurance, routine maintenance, and a repair reserve.
Which utilities do landlords typically pay, and what do they cost in London right now?
In standard London long-term lets, tenants typically pay all utilities including electricity, gas, water, internet, and council tax, while landlords only cover utilities during void periods and any communal charges embedded in the service charge.
During void periods, landlords should budget around £150 to £250 per month (approximately $190 to $315 USD or €175 to €290 EUR) to cover council tax and basic utilities while the property sits empty between tenants.
What does full-service property management cost, including leasing, in London as of 2026?
As of early 2026, full-service property management in London typically costs 15% to 20% of monthly rent (plus VAT), which translates to around £340 to £450 per month (approximately $430 to $570 USD or €395 to €520 EUR) on an average London rent.
On top of ongoing management, letting agents in London typically charge a tenant-finding or leasing fee equivalent to one to two weeks' rent, plus renewal fees of around 50% of one week's rent when tenants extend their lease.
What's a realistic vacancy buffer in London as of 2026?
As of early 2026, London landlords should set aside approximately 8% of annual rental income as a vacancy buffer, which accounts for both empty days and the friction costs of reletting.
In practice, this translates to roughly three to four weeks of vacancy per year, though well-priced properties in high-demand areas may sit empty for as little as two weeks while overpriced or poorly located units can take six weeks or more to fill.
Buying real estate in London can be risky
An increasing number of foreign investors are showing interest. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.
What sources have we used to write this blog article?
Whether it's in our blog articles or the market analyses included in our property pack about London, we always rely on the strongest methodology we can … and we don't throw out numbers at random.
We also aim to be fully transparent, so below we've listed the authoritative sources we used, and explained how we used them and the methods behind our estimates.
| Source | Why It's Authoritative | How We Used It |
|---|---|---|
| Office for National Statistics (ONS) | The ONS is the UK's official statistics agency, publishing the headline rent and price series used across government and industry. | We took London's average monthly rent level from the ONS as our anchor for typical rents in early 2026. We cross-checked it with portal asking-rent data to capture both existing tenancies and new listings. |
| UK House Price Index (HM Land Registry) | This is the official national house price index built from Land Registry and other public sources. | We used the official London average price as the denominator for yield and rent-to-price estimates. We also used the monthly and annual change data to check whether yields were likely widening or tightening. |
| ONS Housing Prices Local Tool | This ONS visualization is fed by the official UK House Price Index, so the numbers trace back to verified public datasets. | We used it to confirm the London average price level and keep our narrative consistent with official local statistics. We also used it to avoid relying on secondary re-quotes of the UK HPI. |
| Greater London Authority Housing Market Report | The GLA is London's strategic authority and publishes regular market monitoring built on public datasets. | We used it to cross-check the direction of rent growth and anchor the demand and supply story specifically for London. We also used its ONS-referenced rent levels as a triangulation point. |
| London City Hall Rents Map | It's hosted by City Hall and explicitly states it uses an ONS-provided combined sample for borough and postcode rents. | We used it to compare rents across boroughs and micro-areas, which helps explain why yields vary inside London. We used those patterns to name concrete neighborhood examples for higher-yield and lower-yield zones. |
| Valuation Office Agency (VOA) | VOA is a government agency whose rent evidence underpins parts of the housing benefit and rent officer system. | We used VOA's role and methodology context to support borough-level rent comparisons. We used it as a credibility check when discussing submarket rent dispersion. |
| Rightmove Rental Market Update | Rightmove is the UK's largest property portal and is transparent that its figures are asking rents for new lets. | We used Rightmove to capture the new-let rent reality and to validate the ONS stock rent level. We used it to explain why yields can look different depending on whether you use new lets versus the whole rented stock. |
| Goodlord Rental Index | Goodlord publishes a consistent, monthly index based on tenancies processed through its platform, including void periods. | We used Goodlord's void-days metric as a practical proxy for vacancy and turnover costs in underwriting net yields. We translated void days into an annual vacancy buffer that a normal landlord can plan around. |
| English Housing Survey | It's an official government housing survey and includes London-specific service charge statistics. | We used the London average service charge for flats as a key recurring cost that reduces net yields. We used it to explain why gross yield can be misleading in London if you ignore service charges. |
| Savills Landlord Fees | Savills is a major, established global real estate firm and clearly publishes its landlord fee schedule. | We used Savills' published fee ranges as a transparent benchmark for full-service letting and management costs. We used it to build realistic net-yield deductions and show readers what full service can cost in practice. |
| British Property Federation BTR Report | BPF is the main UK property industry body, and its BTR stats are widely cited and produced with major partners. | We used it to describe London's expanding professionally-managed rental supply pipeline. We used it to explain where competition and renter demand are likely to concentrate in new hubs and transport-led areas. |
| Transport for London (Silvertown Tunnel) | TfL is the official transport authority for London, and its press releases are primary sources for infrastructure timing. | We used it to name a concrete infrastructure change that can shift accessibility and renter demand in East and Southeast London. We used it to support upcoming project examples with verifiable timelines. |
| London.gov.uk Old Oak Materials | It's published by London's public authorities and ties regeneration directly to major transport investment. | We used it to support why Old Oak and Park Royal is a flagship regeneration story with rental upside potential. We used it to justify naming that micro-area as one to watch for rent growth. |
| GOV.UK Barking Riverside Announcement | It's an official government announcement confirming infrastructure and housing investment. | We used it to validate Barking Riverside as a genuine regeneration area with long-term rental growth potential. We used it to ensure our project examples have verified government backing. |
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