London’s Rental Market Uncovered: Where Investors Can Earn the Highest Yields

As interest rates are predicted to fall in 2025 and rental demand in London remains robust, new research reveals the best property types for buy-to-let investors in the UK capital. For overseas investors seeking high returns in one of the world’s most dynamic real estate markets, this data sheds light on where to focus investments.

Terraced Houses: A Top Performer

According to recent findings by SBA Property Management, terraced houses have emerged as the highest-yielding property type for buy-to-let investments in London. With an average property price of £579,743 and monthly rental income of £2,594, terraced houses deliver a rental yield of 5.37%, outperforming the average across all property types in London, which stands at 4.81%.

Flats and Semi-Detached Homes: Close Contenders

For investors considering alternative property types, flats present another strong option. With average prices of £443,073 and monthly rents of £1,876, flats generate yields of 5.08%, making them the second-most lucrative property type in London.

Semi-detached houses also offer respectable returns, yielding 4.71%. With average prices of £686,952 and monthly rents of £2,695, they are an attractive choice for investors targeting higher-value homes.

Detached houses, while offering the prestige of larger properties, deliver the lowest rental yield at 3.11% due to average prices exceeding £1 million.

Borough Breakdown: Tower Hamlets Takes the Lead

For location-focused investors, Tower Hamlets has been identified as the best borough for buy-to-let investment in London, boasting yields of 5.9%. Other strong-performing boroughs include Southwark, Newham, Barking & Dagenham, and Greenwich, all offering attractive yields and high rental demand.

Comparing London to the Rest of England

While rental yields in London are generally lower than the national average due to high property prices, the research indicates a similar performance pattern across England. Terraced houses and flats are consistently the highest-yielding property types, with average yields of 5.80% and 5.58%, respectively, making these property types reliable choices for investors seeking strong returns.

Why Now is a Strategic Time to Invest

With interest rates stabilizing and expected to decrease, overseas investors have a unique opportunity to secure properties at today’s prices while locking in competitive yields. London’s enduring demand for rental properties, coupled with high-growth areas like Tower Hamlets and Southwark, makes the city a compelling market for buy-to-let investment.

For investors looking beyond London, the trend of terraced houses and flats delivering high yields guides targeting properties across England’s thriving rental market.

Magnate Assets Insight
At Magnate Assets, we specialize in guiding overseas investors through the complexities of the UK property market, offering tailored advice to help you achieve strong returns. Whether you're exploring London or other high-yield areas across the UK, our expertise ensures your investment journey is seamless and profitable.

Explore your options today and capitalize on the potential of the UK property market.