What Are the Best Areas in London for Investing in Rental Properties?

London has always been a popular place to live in. And this ever-growing demand isn’t set to decline as the years go on. With the increasing demand for rental homes, comes the attractive proposition of supplying tenants with properties at a high price. This is perhaps one of the main reasons why so many buy-to-let landlords are starting to look at the capital for rental properties.

However, as taxes have risen rapidly, rental supply has been gradually falling. This makes the rental market far more costly for landlords looking to enter the market. In this case, many are either reducing their portfolio or selling their current properties.

Despite this, for many property investors, 2020 is a great time to invest in property in London. This is because of the improving conditions within the property market. But what are the best areas in London for investing in rental properties?

According to the regional director of real estate agent’s Portico, Vatche Cherchian: “While house prices in London have remained relatively flat over the last couple of years, wage growth hasn’t. “We’ve actually seen a 4% growth year-on-year in wages. And if you tally that wage growth increase up against flatlining London house prices, what you’re saying in real-terms is that it has become around 10% cheaper to buy a property, which is encouraging.”

The real estate giant has identified 8 areas in particular that are worth investing in this year. This is purely based on both the potential for capital growth and rental yields.

The main area which is considered the most attractive is East London – including Redbridge and Ilford. This is due to the fact that the region has experienced regeneration in the last few years. Now a popular area for millennials and older tenants alike, it’s forecasted to have an extensive growth.

As well as East London, South London and West London are also taking a stance, as you’ll see below.

Rental Property Hotspots to Take Note of in 2020:


Since 2012, Sutton has had over £410m invested in it. Now home to just under 7,000 businesses, it has a popular rental market. Set for additional investment opportunities and property development in the near future, it’s an area that you should be aware of.With an average house price of £387, 286 and an average rental yield of 4.4%, it’s a market that’s worth investing in.


Havering is one of the most popular hotspots for properties for two main reasons – the significant regeneration it’s faced in the last few years within the riverside area and the prospect of the three Elizabeth Line Crossrail stations between Harold Wood and Romford. With an average house price of £392, 031 and an average rental yield of 4.9%, it’s a booming market.


Ever since the 2012 Olympics in London, Newham has become more and more popular for prospective homebuyers. Since the event, property prices and rental yields have risen to above London’s typical average for properties.The average house price in Newham is £445,425 and the average rental yield is 4.9%. Due to the high prices, it can make a profitable step for landlords to make.


Redbridge is another borough of East London that’s facing rising house prices. In fact, according to some property experts, within the next five years, the area will outpace other surrounding boroughs by 17% – making it potentially very profitable for those landlords looking for an impressive capital growth. The average house price in Redbridge now stands at £488,632 and the average rental yield is 5%.

Barking & Dagenham

Barking & Dagenham is facing high rental yields and great value properties – despite its popularity. Due to numerous investment projects and future regeneration, the popularity of the area is set to grow. One project, in particular, that could directly affect the potential growth is a planning application that’s secured 10,800 new homes in the area as well as healthcare, community and leisure facilities in the local Barking Riverside. The average house price in Barking & Dagenham now stands at £318,527 and the average rental yield is 5.4%.


Ilford is popular with investors and first-time buyers alike due to the opportunities that it offers. Not only is it great for commuting (soon Ilford Station will be connected to the long-awaited Elizabeth line, meaning that there will be trains to central London every 5 minutes), but it also offers a high average rental yield – making it very attractive for landlords and buy-to-let investors.  The average house price in Ilford now stands at £421,226 and the average rental yield is 5.5%.


Hounslow has seen an influx of interested homebuyers in the last few years. Despite the expensive average home price, the size of the properties makes it one of the most attractive boroughs in Greater London. The average house price in Hounslow is £497, 758 and the average rental yield is 4.7%.

Tower Hamlets

And now we reach the most expensive area for houses on this list – Tower Hamlets. With a very varied demographic, large range of properties and exciting new proposed properties in the pipeline, it’s rising prices are set to continue. The average house price in Tower Hamlets is £545,550 and the average rental yield is 4%.

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