Every brochure quotes a yield and almost none says what it means. This guide computes the gross rental yield for ten London boroughs from ONS averages for July and August 2026, explains why those averages flatter the flats a Gulf buyer is offered, and shows the four deductions, service charge, agent, void and tax, that turn a 4.5 per cent gross into a 2.5 per cent net. Its companion is our guide on regional yields against London.
Market notes
Rental yields in London by area, 2026: the gross figures by borough and what net really means
Gross rental yields by London borough on 2026 ONS averages
Gross yields in London run from 6.6 per cent in Tower Hamlets to 3.5 per cent in Richmond on the ONS 2026 averages, with the all-London figure at 4.9 per cent. The flats a Gulf buyer is offered in the prime districts yield a point below the table, 2.5 to 3.5 per cent gross. The catch is net: service charge, agent, void and UK income tax turn a 4.5 per cent gross into about 2.0 to 2.7 per cent net.
The gross yield for ten boroughs, on the official averages:
Gross rental yields by London borough, 2026
| Borough | Average price, July 2026 | Average rent per month, August 2026 | Gross yield |
|---|---|---|---|
| Tower Hamlets (Canary Wharf, Wapping) | £448,000 | £2,453 | 6.6 per cent |
| Newham (Stratford, Royal Docks) | £390,000 | £1,928 | 5.9 per cent |
| Southwark (Bermondsey, Elephant and Castle) | £572,000 | £2,474 | 5.2 per cent |
| London, all boroughs | £569,000 | £2,332 | 4.9 per cent |
| Hammersmith and Fulham | £738,000 | £2,825 | 4.6 per cent |
| Wandsworth (Battersea, Nine Elms, Putney) | £686,000 | £2,632 | 4.6 per cent |
| Westminster (Mayfair, Marylebone, Bayswater) | £877,000 | £3,196 | 4.4 per cent |
| Camden (Hampstead, Bloomsbury) | £815,000 | £2,819 | 4.2 per cent |
| Kensington and Chelsea | £1,072,600 | £3,597 | 4.0 per cent |
| Richmond upon Thames | £803,000 | £2,333 | 3.5 per cent |
Source: ONS private rent and house prices bulletin, September 2026; ONS local housing figures; firm’s arithmetic.
Prices are the ONS provisional averages for July 2026 (Kensington and Chelsea from the February 2026 index); rents are the ONS mean private rents for August 2026; the yield is twelve months’ rent divided by the price.
How to read the borough yield averages before buying
Two cautions before anyone buys on the strength of a row. First, a borough average blends every flat and house in it, so Westminster’s £877,000 and £3,196 are Pimlico and Paddington as much as Mayfair; the yield on a £3,000,000 Mayfair flat letting for £8,000 a month is 3.2 per cent, not 4.4. The prime districts’ true yields are a point below the table; the eastern boroughs’ are closer to it, because their stock is more uniform.
Why some eastern London yields rose because prices fell
Second, the eastern yields are high partly because prices there fell sharply in the year to July 2026 (Tower Hamlets by 14 per cent on the provisional figure), which raises the yield and lowers the capital; a yield that rose because the price fell is a different thing from a yield that rose because rents did. Rents rose 3 to 5 per cent across every borough in the table.
Deductions that turn gross rental yield into net yield
The deductions that turn a brochure’s gross figure into a net one:
From gross to net on a two-bedroom flat
| From gross to net on a two-bedroom flat | Typical deduction |
|---|---|
| Service charge and ground rent | 0.5 to 1.5 points of yield in a portered block; less in a conversion |
| Letting agent, full management, 12 to 16 per cent of rent plus VAT | 0.6 to 0.9 points |
| Void and re-letting costs, two to five weeks a year | 0.2 to 0.4 points |
| Repairs, insurance, safety certificates | 0.2 to 0.4 points |
| UK income tax under the Non-Resident Landlord Scheme, 20 per cent of profit for most Gulf owners, more above £50,270 | 0.5 to 0.8 points |
| Gross 4.5 per cent becomes net | about 2.0 to 2.7 per cent |
Source: firm’s indicative ranges, October 2026; GOV.UK Non-Resident Landlord Scheme guidance for the tax line.
The service charge is the variable: a new tower at £15 per square foot on an 800 square foot flat is £12,000 a year, which on a £900,000 flat is 1.3 points of yield gone before the agent is paid. Our guide on service charges, ground rent and building safety explains how to read the accounts, and our guide on tax on rent for overseas landlords the tax line.
Worked example of net rental yield on a Bayswater flat
The firm’s worked example for a £1,000,000 flat in Bayswater:
Worked example: £1,000,000 Bayswater flat, 2026
| £1,000,000 two-bedroom flat in Bayswater, let at £4,000 a month | Per year |
|---|---|
| Gross rent | £48,000 (4.8 per cent) |
| Service charge and ground rent | £6,500 |
| Agent at 14 per cent plus VAT | £8,064 |
| Void, three weeks | £2,770 |
| Repairs, insurance, certificates | £2,500 |
| Taxable profit | £28,166 |
| Income tax at 20 per cent (no personal allowance for most Gulf nationals) | £5,633 |
| Net income | £22,533 (2.25 per cent) |
Source: firm’s calculation, October 2026; income tax at 20 per cent under the Non-Resident Landlord Scheme (GOV.UK).
The buyer who was told 4.8 per cent receives 2.25. The buyer who knew that from the start is not disappointed and has priced the flat accordingly.
Rental yields in prime London districts such as Mayfair and Kensington
Mayfair, Knightsbridge, Belgravia, Kensington and St John’s Wood yield 2.5 to 3.5 per cent gross and 1 to 2 net. They are bought for capital preservation, for the family’s use and for a deep resale market, not for income, as our area guides say in each case. A Gulf buyer who wants income should not buy there and then be surprised; a buyer who wants a home there should not be put off by the yield.
Higher rental yield districts in London: Canary Wharf, Stratford and Bermondsey
Canary Wharf and the Isle of Dogs, Stratford and the Royal Docks, Bermondsey and Elephant and Castle, and the completed stock at Battersea and Nine Elms yield 4.5 to 6 per cent gross on the flats a Gulf investor is offered, with net figures of 2.5 to 4 depending on the service charge. The tenant pool is deep, the voids are short, and the capital has been volatile: the eastern boroughs rose fastest in the 2010s and have fallen furthest since 2022.
District guides for Canary Wharf, cheaper London and off-plan property
Our guide on Canary Wharf and our guide on cheaper London set out the districts; our guide on off-plan or completed property explains why the yield on a new tower is lower than the brochure’s by the service charge and the premium paid.
Our view on where to buy London property for yield
For income in London, a completed two-bedroom flat in a well-run block in Tower Hamlets, Southwark or the Bayswater end of Westminster, bought at the block’s resale price, let through an agent that answers our ten questions, and modelled at net not gross. For a net yield above 3.5 per cent, Manchester or Birmingham, with the different risks our city guides describe. For a family home, the prime districts, with the yield ignored. The firm’s rule is that a London flat should be bought for one of those three reasons, stated in a sentence, and that the yield figure in a brochure is never the sentence.
Sources: Private rent and house prices, UK: September 2026 (ONS) · Housing prices in Tower Hamlets (ONS) · Housing prices in Westminster (ONS) · Non-Resident Landlord Scheme (GOV.UK). Checked against the Office for National Statistics’ local housing figures and the September 2026 private rent and house prices bulletin. Yields are arithmetic on those averages and are indicative. General information, not investment advice; the reader’s adviser models a particular flat. Figures verified 14 October 2026.
Frequently Asked
Questions about London rental yields in 2026
Tower Hamlets on the August 2026 figures, at 6.6 per cent gross, because prices there fell 14 per cent in a year while rents rose; whether that is an opportunity or a warning depends on why the prices fell, and the firm’s view is that it is some of each.
It is the London average for ordinary stock and above the prime districts’ figure; after service charge, agent, void and tax it is around 2 per cent net. It is a reasonable return on a secure asset in a reserve currency, and a poor one by Gulf standards, which is the comparison our London or Dubai guide makes.
They rose 3 to 5 per cent across every borough in the year to August 2026, and have risen faster than prices for three years. The Renters’ Rights Act limits increases to once a year by notice, which slows the pace but has not reversed it.
A point below the borough table. Westminster’s £877,000 average and £3,196 rent are Pimlico and Paddington as much as Mayfair; a £3,000,000 Mayfair flat letting for £8,000 a month yields 3.2 per cent, not 4.4. Mayfair, Knightsbridge, Belgravia, Kensington and St John’s Wood yield 2.5 to 3.5 per cent gross and 1 to 2 net. They are bought for capital preservation, the family’s use and a deep resale market, not for income.
In the firm’s worked example, a £1,000,000 two-bedroom flat in Bayswater let at £4,000 a month grosses £48,000, or 4.8 per cent. After £6,500 service charge and ground rent, £8,064 for an agent at 14 per cent plus VAT, £2,770 for a three-week void and £2,500 for repairs, insurance and certificates, the taxable profit is £28,166. Income tax at 20 per cent takes £5,633, leaving £22,533 net, or 2.25 per cent.
It is the variable. A portered block takes 0.5 to 1.5 points of yield, a conversion less. A new tower at £15 per square foot on an 800 square foot flat is £12,000 a year, which on a £900,000 flat is 1.3 points of yield gone before the agent is paid. Our guide on service charges, ground rent and building safety explains how to read the accounts.
Income tax under the Non-Resident Landlord Scheme at 20 per cent of profit for most Gulf owners, more above £50,270, and with no personal allowance for most Gulf nationals. On a two-bedroom flat it takes 0.5 to 0.8 points of yield. Our guide on tax on rent for overseas landlords covers the tax line.
Canary Wharf and the Isle of Dogs, Stratford and the Royal Docks, Bermondsey and Elephant and Castle, and the completed stock at Battersea and Nine Elms yield 4.5 to 6 per cent gross on the flats a Gulf investor is offered, with net figures of 2.5 to 4 depending on the service charge. The firm’s choice is a completed two-bedroom flat in a well-run block in Tower Hamlets, Southwark or the Bayswater end of Westminster, bought at the block’s resale price and modelled at net.
By the service charge and the premium paid. A new tower’s service charge can be £15 per square foot, and the price paid off-plan carries a new-build premium that the resale market does not. The eastern boroughs rose fastest in the 2010s and have fallen furthest since 2022, so the capital has been volatile even where the tenant pool is deep and the voids short. Our guide on off-plan or completed property explains.
For a net yield above 3.5 per cent, yes, with the different risks our city guides describe. London ordinary stock nets around 2.0 to 2.7 per cent from a 4.5 per cent gross. The firm’s rule is that a flat is bought for one of three stated reasons, London income, a higher net yield in the cities, or a family home in the prime districts, and the yield in a brochure is never the reason.
