Prime central London landlord yields reach highest level since 2009, Savills says
Most prime London flats now yield above 4%, with one-bedroom flats averaging 5.8%, as rents rise and property values fall.
Landlords of prime central London property are earning their highest yields since 2009, according to Savills, as rents have gone up while property values have come down.
The agency said most prime London flats now return more than 4%. The average yield on a one-bedroom flat is 5.8%.
Prime central London rents went up 1.1% in the third quarter of 2026, the biggest rise in any quarter for two years, and were 1.9% higher over twelve months. In outer prime London, rents increased 0.9% in the quarter and 2.9% on the year. Savills said the fastest growth came in homes let for under £100,000 a year, the threshold it identifies for the Renters' Rights Act, where a shortage of available homes has led to more competition between tenants.
Outside the capital, Savills recorded quarterly growth of 0.3% in prime regional rents, which were up 1.5% on the same point last year. Over twelve months, the outer commuter belt around London saw bigger rises than any other area, and rents there now stand 33% higher than in the first three months of 2020. Birmingham, Edinburgh and Manchester posted the largest rises in the quarter, with demand for smaller homes holding up best.
Savills said the Renters' Rights Act is still the main worry for landlords, with close to half of its agents citing it as a key issue. Higher tax on income from property investment was the next most common worry, with rising mortgage costs after that.
Jessica Tomlinson, a research analyst at Savills, said caution among landlords appeared to be holding back the number of homes to rent, most of all at lower rents, and that this was helping push rents up. "Affordability constraints are increasingly acting as a ceiling on rental growth," she said, adding that landlords were taking a more pragmatic view on price and often preferred finding a tenant to leaving a property empty.
She said new laws had left landlords with less room to manoeuvre, but that higher yields, together with short-term lets becoming harder to make work, gave them a reason to carry on letting.
