Being a landlord in central London is no longer very profitable
London’s most exclusive boroughs are among the UK’s worst places to invest in 2025 as yields continue to dry up, according to new data.
Property in Kensington and Chelsea gives landlords the lowest return in the country, according to Archimedia Accounts, with yields of just 1.77 per cent.
Westminster fares little better, with a flat costing £898,882, delivering just a 2.12 per cent yield.
In fact, the only non-London borough not in the top 10 is Allerdale in Cumbria, bringing in the same yield as Westminster.
Chris Demetriou, co-founder of Archimedia Accounts, said that while ‘landlords often assume that buying in London’s most exclusive boroughs “guarantees high returns, the data “tells a very different story”.
“It’s a clear warning that prestige postcodes don’t always equal profit, and landlords may need to look outside the capital if they want their money to work harder in 2025,” Demetriou said.
Why are yields so low in London?
Yields are generally higher on the outskirts of London than in the inner boroughs, with buy-to-let investors enjoying an average rental yield of 4.42 per cent across the entire capital over the last five years, according to Benham and Reeves.
But the astronomical prices of property in central London are the reason yields remain low.
The average property price (including houses and flats) in Barking, for example, was £360,000 in July, while the average price of a property in Westminster was just £1,035,000 in the same month.
The average monthly private rent in Barking was £1,650 in July, versus £3,244 in Westminster. This means house prices in Westminster are triple Barking, but rents are just less than twice as much.
More expensive inner London flats also tend to face higher service charges, adding to costs, as well as higher stamp duty payments for buy-to-let investors.
Finally, an influx of supply has helped to keep prices low, coming from both new builds and properties left by high net worths moving abroad.
o Eccles, founder and managing director of prime London buying agency Eccor, explained: “More people are leaving the UK… our property management team has taken on an influx of new properties to be rented out or kept turnkey ready.”