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East London leading the way for rental yields in the capital

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With the second half of the year in full swing and vaccination rates finally achieving the cautiously confident reopening of the country, activity in the market is heightening, spurred on by a rebound in investor confidence.

2021 has seen a significant increase in demand and a fall in supply in the rental market. Between August 2020 and August 2021, the number of tenants looking for a rental property shot up by 55%, while the number of rental properties available fell by 58%.

So, for investors looking to join the pandemic bounce-back, where are the best places in London to consider?

According to Portico’s Q4 data, east London continues to represent the best rental yield opportunities in the capital.

Over the last year, east London’s neighbourhood of Creekmouth has had one of the lowest median house prices across Greater London at just over £300,000 – as well as the best current rental yield in the capital at an impressive 6%. Thanks to its proximity to one of the largest estate regeneration projects in the Thames Gateway, developers have been working alongside local businesses to improve the residential environment of the area and promote job growth.

Many of the areas to top the list of best rental yields in the capital can also be found close by in east London, too. Barking held the top spot last quarter and currently comes in at a 5.9% yield, in joint second place with Cranbrook. Barking has also benefited from considerable redevelopment, including additional homes close to the mainline station, as well as new business and retail spaces. Barking also currently offers low average property prices by general London standards, with the average value sitting at around £350,000.

Third, on the east London table comes Little Heath – just a clip under Creekmouth and Barking at a 5.8% yield. Little Heath is close to the busy A12 motorway but is designated as a conservation area and manages to maintain a charming village atmosphere.

Across the rest of the capital, north London’s Freezywater and Ponders End offer a healthy yield of 5.7%. The best yield in the west is still 5.1% in Hayes and Harlington, and in the south, West Wickham has taken the top spot at 4.8%. The north’s top performer of Freezywater currently lacks good transport connectivity, but Enfield station is close by and will soon reap the benefits of the Crossrail completion.

It has been a turbulent time for landlords and the economic uncertainty has made it difficult to know how and when to act. The further easing of restrictions coupled with many strong rental yields on offer across London is signalling the start of a healthy return to investing, especially to the east of London.

Sophie Durkin, Portico’s Regional Director, says: “There may be signs in some regions of increasing inventory as we head out of the pandemic, but it will be some time before any real balance is restored in the market. While London remains a strong sellers’ market overall, the demand for rentals is high as the country reawakens and the outer boroughs of the capital once again become a highly desirable location for professionals and families alike.

“Many of the capital’s highest rental yields are found in areas with lower-than-average London property prices, despite the fact that many of those areas are experiencing an exciting time of growth and regeneration. These pockets are currently providing some excellent opportunities for investors.”

https://www.propertyreporter.co.uk/property/east-london-leading-the-way-for-rental-yields-in-the-capita.html