Tower Hamlets and Newham are delivering the strongest buy-to-let returns in London, according to new research from Benham and Reeves, with both boroughs also recording the largest annual increases in rental yields.
The analysis, which compared average house prices and rental values across every London borough, found that the capital’s average rental yield has risen to 5% from 4.9% a year ago, underlining the resilience of the rental market despite ongoing economic uncertainty.
Tower Hamlets emerged as London’s top-performing borough for landlords, offering an estimated gross rental yield of 6.3%, up from 5.5% a year earlier. Benham and Reeves said the improvement has been driven by a combination of softer house prices and continued strength in rental demand.
Newham ranked second, with an estimated yield of 6%, compared with 5.2% in March 2025.
YIELD GROWTH
Barking and Dagenham placed third at 5.6%, followed by Lambeth at 5.5%. Hackney and Southwark both delivered yields of 5.1%, while Greenwich achieved 5%. Islington (4.9%), Croydon (4.8%), and Enfield and Wandsworth (both 4.6%) completed the top ten.
At the opposite end of the scale, Kensington and Chelsea remained London’s lowest-yielding borough at 3.4%, despite a modest improvement over the year. Richmond upon Thames followed at 3.5%, with Kingston upon Thames recording a yield of 3.8%.
The research also showed that Tower Hamlets and Newham led annual yield growth, with both boroughs seeing an increase of 0.8 percentage points over the last year.
Lambeth, Wandsworth and Barking and Dagenham each recorded annual growth of 0.4 percentage points, while Barnet, Croydon, Enfield, Hammersmith and Fulham, Richmond upon Thames and Westminster all saw gains of 0.3 percentage points.
Only Brent and Waltham Forest experienced a decline in yields, both falling by 0.1 percentage points year-on-year.
GOOD OPPORTUNITIES
Marc von Grundherr, director of Benham and Reeves, said: “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.
“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.
“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.”
