"London's rental market continues to provide attractive opportunities for buy-to-let investors, particularly in boroughs where house price growth has softened while tenant demand remains robust"
- Marc von Grundherr - Benham and Reeves
Tower Hamlets and Newham are delivering the strongest London buy-to-let rental yields in the capital, and have also recorded the largest annual increases of any borough over the past year, according to new research from lettings and estate agent Benham and Reeves.
The firm analysed average house prices and rental values across every London borough, comparing conditions in March 2026 with those a year earlier to calculate estimated gross yields and track annual changes. Across London as a whole, the average rental yield now stands at 5%, up from 4.9% a year ago.
Tower Hamlets ranks as the most profitable borough for buy-to-let investors, with an estimated gross yield of 6.3%, up from 5.5% twelve months earlier. A combination of softening property values and sustained rental demand has driven the improvement. Newham sits in second place at 6%, up from 5.2% over the same period.
The remainder of the top ten highest-yielding boroughs are Barking and Dagenham (5.6%), Lambeth (5.5%), Hackney (5.1%), Southwark (5.1%), Greenwich (5%), Islington (4.9%), Croydon (4.8%), and Enfield and Wandsworth, both at 4.6%.
At the other end of the table, Kensington and Chelsea has the lowest yield in London at 3.4%, followed by Richmond-upon-Thames at 3.5% and Kingston-upon-Thames at 3.8%.
On annual yield growth, Tower Hamlets and Newham again lead the way, each recording an increase of 0.8 percentage points over the year. Lambeth, Wandsworth, and Barking and Dagenham each posted growth of 0.4 percentage points, with Barnet, Croydon, Enfield, Hammersmith and Fulham, Richmond-upon-Thames, and Westminster all recording increases of 0.3 percentage points. Only Brent and Waltham Forest saw yields fall, each declining by 0.1 percentage points.
"London's rental market continues to provide attractive opportunities for buy-to-let investors, particularly in boroughs where house price growth has softened while tenant demand remains robust," said Marc von Grundherr, director of Benham and Reeves.
"Tower Hamlets and Newham stand out not only because they currently offer the highest rental yields in the capital, but because they have also seen the most significant improvement over the last year. This combination of strong income returns and positive yield growth is likely to attract increasing investor interest.
"At the same time, traditionally prime markets such as Kensington and Chelsea and Richmond upon Thames continue to generate lower yields due to their higher property values, but these areas always remain attractive for investors seeking long-term capital appreciation rather than immediate rental income."
