Prime central London landlords get their best yields since 2009 as rising rents meet softer prices
A landlord now earns more income for each pound of value, because each pound of value has shrunk.
Original reporting:Savills UK | What makes prime central London differentRental Yields: Understanding Prime Central London - Property Industry EyeSavills forecast prime markets bottoming out in 2026Constrained rental supply supports yield growth for landlords
Written with AI by the Luxury Assets News desk. How we work.
What happened
Prime central London rental yields have hit a 17-year high, according to Savills figures reported in mid-October. The cause is as much falling values as rising rents.
Yield is annual rent as a share of what a property is worth, so it rises when values fall. Rents in the area rose only 1.9 per cent over the past year, according to Savills.
Values did the rest. Savills said in January that prime central London prices fell 4.8 per cent in 2025, leaving them 24.5 per cent below their 2014 peak. Its forecast is for a further fall of 2.0 per cent in 2026, then no change in 2027.
A flat in the area now earns an average gross yield of 4.0 per cent, against 2.8 per cent five years ago. Houses sit at 3.3 per cent, up from 2.6 per cent. Across prime London, one-bedroom flats do best, at an average of 5.8 per cent.
Landlord supply is tight at the lower end. Savills says the Renters’ Rights Act is the biggest concern for landlords, and almost half of its agents named the legislation as a key issue. The effect is sharpest on rents below £100,000 a year, where fewer homes to let have intensified competition among tenants.
At the top end, Savills says rental increases have eased because tenants there have more choice.
Savills says better yields could encourage some landlords to stay in the private rented sector rather than sell. Higher yields do not necessarily mean higher net returns, particularly where landlords face increased financing, maintenance and compliance costs, according to Property Industry Eye.
Key issues: our analysis
- Yield lifted by falling values
- Renters’ Rights Act and landlord supply
- Gross versus net returns
Who should pay attention
- Owners of prime central London flats and houses
- Private bankers and trustees advising London property owners
- Lenders against London property
What to watch
- Savills forecasts a 2.0 per cent fall in prime central London values in 2026 and no change in 2027.
- Whether stronger yields translate into greater rental availability, which Property Industry Eye says will depend partly on how landlords respond to the regulatory and tax changes.
Sources
How this was produced
This original summary was prepared with AI from the linked reporting and published through automated editorial checks. It has not been individually verified by a human editor. Analysis sections are our interpretation. For information only; not financial, investment, tax or legal advice. Editorial standards · Corrections.
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