Tips for securing the best rental returns in London

Buy-to-let (BTL) investing is common in London, where rental demand is high and housing stock is limited. But in a competitive and diverse market like London, rental properties need to stand out to deliver the right returns.

Over the last 15 years from 2009 to 2024, the number of households renting in the UK increased by 52% from 3.1 million to 4.7 million. With over a million households like this in London, landlords in the capital enjoy average rents well above those in other regions of the country. Because of high demand in a market where tenants can afford to pay a premium for comfort and convenience, landlords can make attractive returns if they follow a few smart tips.

Understand the difference between gross and net rental yields

Rental yield is the percentage of your annual rental income calculated against your property’s market value. It uses a simple formula of first multiplying your monthly income by 12 and then dividing that value by your property purchase price, which is most likely a decimal value that is then multiplied by 100.

However, simply calculating gross yield without factoring in the costs of running and maintaining a property is not accurate, and many landlords therefore subtract these costs from income to get a more precise net rental yield. Present and future landlords can save some time by using our rental yield calculator to get a fair estimate of their rental returns.

Picking the right neighbourhood for investment

Improving supply over the past few months has eased pressure on rents in the capital, as the ONS reported a 5.7% increase in London’s average annual rents in August 2025. However, in regions with a lot of demand, like Wandsworth and Camden, growth was above average at 6.9% and 11.6%, respectively. As a BTL landlord, identifying the right rental hotspots is crucial for achieving the best yield.

Selecting the correct type of lettings and getting the licence

Whether renting to a single household or multiple occupants is a decision landlords need to make based on their property type and licence eligibility. While letting individual rooms can offer better net returns in the long run, they also entail greater responsibilities and tighter regulations. Firstly, HMO licences are mandatory across all London councils, and secondly, lenders may have different mortgage terms and conditions.

Adding new features and upgrades

Rental markets in London can be seasonal, with high demand in spring and summer, especially at the start of the academic year or during relocation season. Savvy landlords looking to attract well-paying tenants during this time can add some features to make their properties more appealing.

• Ready-to-move-in furniture packs are appreciated by students and working professionals who want to avoid the cost of buying furniture.
• High EPC ratings, which are supported by energy-efficient appliances, help keep electricity bills low.
• Stylish interiors with the new fittings and fixtures add comfort and appeal to living spaces.

There are several costs that come with operating a rental property in London. Landlords need to budget for monthly expenses such as utility bills, mortgage repayments, council tax, property licences, insurance, maintenance and repairs. Based on these outgoings, landlords should price the rent accordingly to make a profit.

Flexible lettings strategy

Based on their target tenant profile and local market trends, landlords need to adopt a strategy that offers the best possible outcome. For example, BTLs in business districts like Canary Wharf and the City may require landlords to cater to working professionals. Similarly, properties near top London universities may require landlords to cater to student needs.

Using professional lettings and management services

Working with a professional, London-based lettings and property management company can help landlords stay on top of all compliance requirements and also manage tenant expectations efficiently. Whether it is acquiring the necessary licences, referencing tenants or managing admin tasks like deposit and rent collection and sorting out tax returns, a dedicated property partner like Benham and Reeves can help with everything.

We have 21 branches across London, along with 14 international offices and multiple country desks to help local and overseas London landlords with all their lettings and property management needs. With a legacy of over 65 years, we can quickly adapt to changing laws, such as the Renters’ Rights Bill and other legislation, so that landlords can enjoy hassle-free and consistent income from their investments.

Planning to invest in a BTL property in London? Contact us