Good news for London investors as yields bounce back

Research by rental portal Rentd suggests improved London yields this year after being in the doldrums during the pandemic.

Rentd analysed the average rental yield based on both rental and house price values in 2021 and how the market has performed during the pandemic. 

The analysis shows that the average rental yield fell to 3.7 per cent last year, down 0.3 per cent year on year and a drop of 0.6 per cent when compared to pre-pandemic levels.

The impact of Covid-19 on the London rental market remains clear, with the City of London seeing one of the largest annual declines along with Westminster at 0.8 per cent.

The City of London has also seen the largest decline when compared to pre-pandemic yields, with a 1.5 per cent drop. 

When it comes to the boroughs currently offering the strongest returns, East London is leading the way. 

Both Newham and Tower Hamlets boast an average yield of 4.5 per cent with Barking and Dagenham (4.4 per cent), Greenwich (4.1 per cent), and Lambeth, Hounslow and Southwark (3.8 per cent) also sitting above the London average. 

Rentd founder Ahmed Gamal adds: “Although 2021 was certainly a better year for the London rental market, Covid-19 continued to stifle demand from both domestic and international tenants, as restrictions on travel and advice on working from home remained in place. 

“As a result, rental values continued to fall as landlords looked to secure a tenant and recoup some of their losses after a very tough 2020 and this was the driving factor behind a further decline in rental yields, most notably across the City of London and Westminster.

“The good news is that 2022 is already looking far more promising. London has reopened for business and we’ve already seen a sharp uplift in tenant activity which is helping to rejuvenate rental values at quite some pace.”

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