Written by Lewis Ridley
Updated over a week ago
London is an expensive place to invest in a buy-to-let, especially if you don’t know the area. Fortunately, using the data we have available, we can see where you should be putting your money if this is your first time.
In 2023, the best buy-to-let areas in London are:
1. SE13 – Lewisham
2. E12 – Manor Park and Little Ilford
3. E15 - Stratford
4. SW17 – Walworth and Newington
5. SE11 – Kennington
6. N9 - Edmonton
7. NW3 - Hampstead
8. SE25 - South Norwood
9. W6 - Hammersmith
10. E13 - Plaistow
This guide will go through each area and break down what makes them a great place for buy-to-lets in London. Let’s jump straight in.
Lewisham is the first place buy-to-let investors should be looking if they’re looking to dive into the London scene. Lewisham has been gaining a good yield and has experienced good growth over the past few years.
Despite being in London, yields are around 5% on average. However, this changes depending on the house type. In terms of growth, the area has been steadily growing 3.1% over the past 3 years.
In terms of price, average house prices in Lewisham are £485,000, which is expensive when compared to the UK average. However, for London , this price is very fair.
E12 is a postcode in the East of London and contains locations such as Manor Park and Little Ilford. This is a good area to investigate if you’re looking to purchase buy-to-let properties as the yield are strong, especially for London.
Yields around this area sit around the 6% mark. Not bad for one of the most expensive cities in the world. 3-year growth is also looking position, currently sitting at 15%. So, even if you’re not hunting for strong monthly cashflow, you can still benefit from this area in London.
Stratford makes it on to this list as well, and for good reasons. With strong yields and solid growth over the past 5 years, it’s definitely a location you should be investigating further.
Strategy currently has a rental yield of 5%, which is higher than the national average. Additionally, growth has been fantastic with a 19% increase over the past 5 years. Combine all this with the lower-than-average London price of £434,000, this is a great location to purchase a buy-to-let.
SE11 is another good London postcode offering positive yields and solid yearly growth. This area primarily includes Kennington. If you’re looking for a good buy-to-let spot in the South of London, this is an area to check out.
Rental yields are peaking around 5%. This depends on the house type, however, as some properties are achieving more. Additionally, growth over the past 3 years has been strong, sitting at 6.8%.
N9 is a solid postcode and area in London if you’re after buy-to-lets. N9 includes Edmonton, which has cropped up a top investment for London across multiple analyses. This also includes both upper and lower Edmonton, as both offer good yields for investors.
Currently, with both Upper and Lower Edmonton, you can expect to achieve rental yields upwards of 5%. In some cases, you can also achieve 6%. This is because the price is surprisingly low, with average prices sitting at £375,000 – significantly lower than London’s average.
NW3 also makes this list and is a good location to look for investment properties, especially if you’re interested in North London. This location includes Hampstead and offers good rental yields and decent growth. However, house prices are expensive, so bear that in mind.
Rental yields in Hampstead are sitting around 4%, which is good considering the average house price here is £1,950,000. You’ll certainly need a pretty penny if you’re looking to invest here.
Growth is on the lower end here as well when compared against the other areas in this list. Over the last 3 years, NW3 has increased in value by 2.3%. So, it might not be a great option for long-term buy-to-let investors.
SE25 also makes this list. It offers great rental yields and is also very cheap when compared to the rest of London. SE25 includes the south of Norwood and is an area investor should be watching if you want a bargain London property.
SE25 offers superior rental yields of 5%, giving landlords great cashflow every month. Additionally, the prices in SE25 are significantly lower than the average in London, sitting at £383,000.
Growth is perhaps the only issue with SE25, as the area has declined in value by -0.1% over the past 3 years.
For the West London investors reading, this one is for you. If you’re after a buy-to-let in the West, W6 is the location you should be looking at. This area includes Hammersmith and is a decent option if you’re hunting for yield gains. Just be warned, the properties are pricey.
Rental yields around these parts average at 5%. This stays pretty consistent across different property types as well. Now, although the yield is good, you are dealing with West London. Therefore, expect to pay an average price of £1,054,000 if you want to own a property in this area.
Finally, if you’re after a good buy-to-let location in London, explore opportunities in Plaistow, E13. This area is great for yield and is also fairly cheap, offering a low barrier to entry for beginner investors.
E13 is currently offering yields in the region of 5% with an average house price of £421,000. Although there are cheaper locations on this list, that figure is still good for a city like London.
One thing to watch out for though is the growth numbers. Over the past 3 years, E13 has declined by -2.2%. So, although it’s great for yield, it’s poor for long-term investment.
London is an expensive place get a buy-to-let. However, there are certain locations that are better than others. By using the list above, you can narrow down your searching and only pick the best areas to invest money in.
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