Flats are the favourite homes of choice to let in London – and the bigger the better for landlords looking for maximum rental returns.
Three-bedroom flats showed the largest rent rise over 2018, with tenants forking out an average £658 a week (£2,851 a month) to landlords – a 3.9 per cent year-on-year increase.
Single bedroom flats were next best with a 2.2 per cent annual increase, ending the year commanding an average rent of £366 a week (£1,586 a month), according to data for 2018 from London estate agents Foxtons.
To zero in on the best places to own a flat, landlords should look in Transport for London’s Zone 2, which stretches from Chiswick in the west to Canning Town in the east and from Archway in the north to Clapham, Putney and Brixton south of the Thames.
The firm pinpoints upcoming rental hot spots as Hornsey, Hayes and Leyton, while the best yield is 4.5 per cent in Barking & Dagenham. Newham, Tower Hamlets and Greenwich are the other boroughs with the highest yields.
However, most of these places are outside Zone 2 except Tower Hamlets and some spots in Newham, although Leyton and Hornsey are on the fringes.
Foxtons also issues a word of warning about ground floor flats. The letting and estate agency says landlords letting these flats are stacking up losses as the rental premium – which compares the cost per square foot with rental value per square foot – turns out at -9.4 per cent. This means the return on investment is lower than for other flats.
Flats on a raised ground floor – accessed up a flight of steps from the street – carry a premium of 6.2 per cent, while basement flats come in at 4.7 per cent.
Zone 2 is the most popular place to live for renters, where rents average £459 a week (£1,989 a month), compared with Zone 1’s £554 a week (£2,400 a month) and £394 a week (£1,707 a month) for Zones 3-6.