London Landlords See Rental Yields hit 11%

28 August 2012 Categories: News

London Landlords See Rental Yields hit 11%

Landlords with buy to let property in some areas of London have reported rental yields in excess of 11% for the first time, although the vast majority of the city is still experiencing more modest yields of around 8.5%.

Research conducted by Hamptons International has shown that average rental yields in the Capital differ quite dramatically according to postcode, but places like Spitalfields and Brick Lane are at present providing gross yields of around 11.3%. At the other end of the scale are places like Finsbury Park, Knightsbridge and South Kensington where the costs associated with property are much higher.

The elevated yields are of course a consequence of the rental increases seen over the last twelve months in the city, with the average rent now standing at £1,260 per month – an 8.4% increase when compare to the same period last year and the highest recorded to date.

Adam Challis, head of research at Hamptons International, commented that although investors will see 11% rental yields as an attractive feature of some London boroughs, they need to be aware that the potential costs involved in such properties can wipe out any additional yields they may see. “There is a hidden cost of voids and high management costs in the less salubrious areas,” said Mr Challis.