Tower Hamlets and Newham deliver strongest buy-to-let returns as rental yields climb across London

The latest research from London lettings and estate agent, Benham and Reeves, reveals that Tower Hamlets and Newham currently offer the strongest rental yields for buy-to-let landlords, having also recorded the largest annual increases in rental yield across all London boroughs.

Benham and Reeves analysed average house prices* and average rental values* across every London borough to determine where landlords can achieve the strongest rental returns. The research compared current market conditions in March 2026 (latest data available) with those seen a year earlier, calculating estimated gross rental yields and measuring annual changes.

The analysis found that the average rental yield across London now stands at 5%, up from 4.9% a year ago, demonstrating the continued resilience of the capital’s rental market despite wider economic uncertainty.

Tower Hamlets currently ranks as the most profitable borough for buy-to-let investors, with an estimated gross rental yield of 6.3%. This marks a substantial increase from 5.5% a year ago. The borough’s strong performance has been driven by a combination of falling property values and continued rental market strength.

Newham sits in second place, with landlords achieving an estimated yield of 6%, up from 5.2% a year ago.

The remainder of the top ten highest yielding boroughs are Barking and Dagenham (5.6%), Lambeth (5.5%), Hackney (5.1%), Southwark (5.1%), Greenwich (5%), Islington (4.9%), Croydon (4.8%), and Enfield and Wandsworth, which both deliver yields of 4.6%.

At the other end of the spectrum, Kensington and Chelsea remains the borough with the lowest rental yield at 3.4%, despite a modest annual improvement. Richmond-upon-Thames ranks second lowest at 3.5%, while Kingston-upon-Thames follows closely behind at 3.8%.

When it comes to annual yield growth, Tower Hamlets and Newham have led the way, with both boroughs recording an increase of +0.8% over the last year.

Lambeth, Wandsworth and Barking and Dagenham occupy the next positions, each recording annual growth of +0.4%. Barnet, Croydon, Enfield, Hammersmith and Fulham, Richmond-upon-Thames and Westminster all recorded increases of +0.3%, completing the top ten strongest annual improvements.

Only two London boroughs saw a reduction in yields over the past year. They are Brent and Waltham Forest, both of which saw yields shrink by -0.1%.

Marc von Grundherr, Director of Benham and Reeves, commented:

“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. This combination of strong income returns and positive yield growth is likely to attract increasing investor interest.

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 wealth preservation with long-term capital appreciation rather than immediate rental income.”