Tower Hamlets Tops London Buy-to-Let Yields 6.3% – Tower Hamlets 2026

Key Points

• Tower Hamlets ranks as London’s top buy-to-let borough with an estimated gross rental yield of 6.3%, rising from 5.5% over 12 months
• Newham secured second place with landlords achieving 6% yield, up from 5.2% a year earlier
• Both Tower Hamlets and Newham posted the strongest annual yield growth at +0.8% over the year
• The increase in Tower Hamlets links to lower property values alongside continued strength in the rental market
• London’s average gross rent yield now stands at 5%, up from 4.9% a year ago
• Barking and Dagenham ranked third at 5.6%, followed by Lambeth at 5.5%
• Only two London boroughs saw yield reductions: Brent and Waltham Forest, both shrinking by -0.1%
• Kensington and Chelsea remains the lowest-yielding borough at 3.4%, despite a small annual rise
• Marc von Grundherr, director of Benham and Reeves, stated the combination of strong income returns and positive yield growth will attract increasing investor interest
• The research analysed average house prices and rent values across every London borough, comparing March 2026 with March 2025

Tower Hamlets (East London Times) June 10, 2026 – Landlords weighing up where London still pays its way are seeing the strongest gross returns in the east of the capital, according to new research from Benham and Reeves.

The lettings and estate agent has put Tower Hamlets at the top of London’s buy-to-let yield table with an estimated gross yield of 6.3%, rising significantly from 5.5% over the past 12 months. The firm stated the increase was linked to lower property values alongside continued strength in the rent market.

Newham ranked second in the capital, with landlords achieving an estimated yield of 6%, up from 5.2% a year earlier. Tower Hamlets and Newham also posted the strongest annual yield growth, with both boroughs rising by +0.8% over the year.

Which Boroughs Follow Tower Hamlets and Newham in London’s Yield Rankings?

Barking and Dagenham follow the top two positions with a yield of 5.6%, ahead of Lambeth at 5.5%. Hackney and Southwark both delivered 5.1%, while Greenwich reached 5%.

Islington produced a gross yield of 4.9%, Croydon stood at 4.8%, and Enfield and Wandsworth both returned 4.6%. These figures place the top-performing boroughs distinctly above the London average, which now stands at 5%.

The lettings and estate agent analysed average house prices and average rent values across every London borough, comparing March 2026 with March 2025. This comprehensive analysis covered all 32 London boroughs to provide a complete picture of buy-to-let performance across the capital.

Why Are Tower Hamlets and Newham Offering the Highest Rental Yields in London?

As reported by the Property118.com Landlord News Team, Marc von Grundherr, a director of Benham and Reeves, said:

“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”.

He stated:

“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”.

Von Grundherr added:

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

The director highlighted that the specific combination of factors in these eastern boroughs creates a particularly favourable environment for buy-to-let investors.

How Does London’s Average Rental Yield Compare to Last Year?

The research shows the average gross rent yield across London now stands at 5%, up from 4.9% a year ago. This represents a modest but consistent increase across the capital as a whole.

According to additional research from London lettings and estate agent Benham and Reeves, Tower Hamlets and Newham are the London boroughs delivering strongest buy-to-let returns as rental yields climb across the capital. Their analysis confirmed that the average rental yield now stands at 5%, up from 4.9% a year ago.

Which London Boroughs Experienced Rental Yield Declines and Which Remain Lowest?

Only two boroughs recorded falls over the past year, with Brent and Waltham Forest both seeing yields shrink by -0.1%. These represent the only exceptions to the overall upward trend in London rental yields.

At the bottom of London’s buy-to-let yield table, Kensington and Chelsea is the lowest-yielding borough at 3.4%, despite a small annual rise. Richmond-upon-Thames was second lowest at 3.5%, followed by Kingston-upon-Thames at 3.8%.

What Are the Annual Yield Growth Figures Across Other London Boroughs?

Beyond Tower Hamlets and Newham’s leading +0.8% growth, Lambeth, Wandsworth and Barking and Dagenham each recorded growth of +0.4%.

Barnet, Croydon, Enfield, Hammersmith and Fulham, Richmond-upon-Thames and Westminster all saw increases of +0.3%, completing the top ten strongest annual improvements. This distribution shows that yield growth has been widespread across London, though concentrated in certain areas.

Opportunities for Buy-to-Let Investors in East London Boroughs

The research highlights specific opportunities for buy-to-let investors considering London property investment. Marc von Grundherr’s commentary emphasises that London’s rental market continues providing attractive opportunities particularly in boroughs where house price growth has softened while tenant demand remains robust.

Tower Hamlets and Newham stand out for two key reasons: they currently offer the highest rental yields in the capital, and they have seen the most significant improvement over the last year.

This dual advantage of high current yields plus strong growth trajectory makes these boroughs particularly compelling for investors.

The combination of strong income returns and positive yield growth is likely to attract increasing investor interest according to von Grundherr.

This suggests the current performance may not be temporary but could indicate a sustained shift in investor preference toward eastern London boroughs.

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How Do Property Values and Rental Strength Drive Tower Hamlets’ Performance?

The firm said the increase in Tower Hamlets’ yield was linked to lower property values alongside continued strength in the rent market. This formula—depressed property prices combined with resilient rental demand—creates the mathematical conditions for higher yields.

When property values fall while rents remain strong or increase, the rental yield (calculated as annual rent divided by property price) automatically rises. This mechanism explains why Tower Hamlets saw its yield rise from 5.5% to 6.3% over 12 months.

Background: Tower Hamlets and East London’s Buy-to-Let Property Market Context

Tower Hamlets is a London borough in East London, encompassing areas including Canary Wharf, Poplar, Blackwall, Bow, and Canning Town. The borough has historically offered lower property prices compared to central London locations, making it accessible for buy-to-let investors.

Average property values in Tower Hamlets have stood around £456,375 in previous analyses, with monthly rental costs approximately £2,244. However, the 2026 research indicates property values have fallen further, contributing to the yield increase.

House prices in Tower Hamlets fell by 10.1% in the 12 months preceding the research, according to market data. This significant price decline, combined with sustained rental demand, created the conditions for yield improvement from 5.5% to 6.3%.

Newham, neighbouring Tower Hamlets in East London, includes areas such as Stratford, Plaistow, and West Ham.

The borough has benefited from Olympic legacy infrastructure, the Elizabeth Line connectivity, and significant ongoing development. Average asking prices in Stratford (E15) cluster around 6.1% gross yield at approximately £435,000.

Barking and Dagenham, ranked third at 5.6%, contains London’s cheapest house prices among boroughs. Barking (IG11) is identified as the highest-yielding postcode in all of Greater London at approximately 7.2% gross yield, with average asking prices around £308,000.

London’s rental market has been described as “on fire” in recent analysis, with strong tenant demand across the capital.

The boroughs offering highest yields historically include those with lowest property prices, reducing initial investment needed to secure returns.

Interest rates were cut by the Bank of England for the first time since March 2020, setting the stage for mortgage costs to fall. Further cuts forecast in subsequent years have positioned property investors in stronger positions to buy.

Prediction: How Will Tower Hamlets’ Yield Leadership Affect London Landlords and Buy-to-Let Investors?

Landlords already owning properties in Tower Hamlets and Newham will see improved gross returns on their investments. The 0.8 percentage point yield increase in both boroughs represents enhanced income returns without requiring rent increases or property value growth.

For a Tower Hamlets landlord with a £456,375 property, the yield increase from 5.5% to 6.3% translates to approximately £3,648 additional annual income. This improvement occurs purely through the mathematical effect of lower property values combined with sustained rental strength.

Effect on Potential Buy-to-Let Investors Considering London

The combination of strong income returns and positive yield growth in Tower Hamlets and Newham is likely to attract increasing investor interest according to Marc von Grundherr. Investors weighing London locations will increasingly favour these eastern boroughs over previously popular central locations.

London’s rental market continues providing attractive opportunities for buy-to-let investors, particularly in boroughs where house price growth has softened while tenant demand remains robust.

This suggests investors prioritising income returns over capital appreciation will shift focus toward Tower Hamlets, Newham, and Barking and Dagenham.

The research indicates Tower Hamlets and Newham stand out not only for current highest rental yields but for most significant improvement over the last year. This dual advantage may accelerate investor migration toward eastern London boroughs.

Consequences for Tenants in High-Yield Boroughs

Increased investor interest in Tower Hamlets and Newham could intensify competition for rental properties, potentially affecting tenant availability. However, the research notes tenant demand remains robust in these boroughs, suggesting the market can absorb additional investment.

The sustained strength in the rent market that contributed to yield increases indicates tenants continue organising payment of current rental levels. This suggests no immediate pressure for rent reductions despite increased landlord competition.

Implications for London’s Overall Rental Market Geography

With only two boroughs (Brent and Waltham Forest) experiencing yield reductions while the majority saw increases, the trend indicates broad-based rental market strength across London. However, the concentration of highest yields in eastern boroughs suggests a geographical shift in buy-to-let investment preference.

Kensington and Chelsea’s position as lowest-yielding borough at 3.4%, despite a small annual rise, highlights the continued disparity between prime central London and eastern boroughs. Investors seeking yield above 5% will increasingly focus on eastern locations rather than traditional central London areas.

The average gross rent yield across London standing at 5%, up from 4.9% a year ago, indicates the capital’s rental market is delivering modest but consistent improvement. Tower Hamlets and Newham’s performance significantly exceeds this average, reinforcing their position as premium yield locations within London.